Anatomy of an M&A Transaction (III): 8 Line Items to Expect in Any Due Diligence Checklist

By Michael Mercurio Esq., Offit Kurman

For buyers and sellers alike, due diligence is often what makes or breaks a mergers and acquisitions (“M&A”) transaction. Now that you have agreed to the prospective buyer’s expectations, as outlined in a letter of intent (“LOI”) or term sheet, it is time for both parties to get serious about pursuing the deal. For your buyer, this means a rigorous investigation of your business. For you, this means accommodating your buyers’ requests, and preparing your records as thoroughly as possible (which hopefully are in good order, as you have ideally performed a self-audit of your business prior to going to market).

Corporate Finance

Anatomy of an M&A Transaction (IV): Top Considerations for M&A Negotiations

By Michael Mercurio Esq., Offit Kurman

If a mergers and acquisitions (M&A) transaction is analogized to a baseball game, negotiations are the seventh-inning stretch. For seller and buyer alike, this process is a potentially thorny and grueling one, as both sides are often pursuing opposite agendas: You want to sell your business at the highest price along with the best terms possible, while your buyer aims to bring purchase your business for the fewest dollars possible and achieve their ideal purchasing terms.

Corporate Finance

Anatomy of an M&A Transaction (I): The Importance of Pre-transaction Planning Before Selling Your Business

By Michael Mercurio Esq., Offit Kurman

The decision to sell your business is typically one of the most important inflection points in the lifecycle of your business. Chances are that when you arrive at this decision point, either because you have affirmatively decided to go to market to sell or you have been presented with a viable offer from a third party purchaser that:

You have never sold a business before.
You do not know where to start the process.

You are not alone as most sellers identify with the points above. But remember the golden rule that applies to all closely held businesses — you will leave your business one day, voluntarily or involuntarily. It is the only absolute truth in business.

Corporate Finance

Anatomy of an M&A Transaction (II): 3 Key Provisions in a Mergers and Acquisitions Letter of Intent

By Michael Mercurio Esq., Offit Kurman

Most mergers and acquisitions (“M&A”) transactions commence in earnest with a letter of intent (AKA a term sheet). As the name implies, a letter of intent (“LOI”) is a written document that outlines the intentions of the buyer and the seller during a transaction. Simply put, the LOI is the roadmap to the transaction. Among other matters, the LOI will include the purchase price for the subject business (and the associated payment terms) as well as the other key considerations and conditions to the transaction. In the end, the LOI is a written expression of the buyer’s intentions to purchase your business and with its submission to the seller indicates the buyer’s intentions for the deal. The LOI is a very important document. It should be in writing and it should be carefully crafted.

Corporate Finance

Anatomy of an M&A Transaction (V): Factors To Consider When Closing M&A Deals

By Michael Mercurio Esq., Offit Kurman

No matter how thoroughly you prepare to sell your business, closing a mergers and acquisitions (M&A) deal requires a great deal of patience and commitment from the seller’s vantage point. Chances are you will need to wait longer than you would otherwise prefer to receive your payout, as there are many I’s to dot and t’s to cross by the buyer. Keep focused and be mindful of seller fatigue (that uncanny sensation to just give in to the buyer’s demands in order to get the deal finished)

Corporate Finance

Anatomy of an M&A Transaction (VI): Post-closing Matters in M&A Transactions

By Michael Mercurio Esq., Offit Kurman

The day you sign away ownership of your business is a major milestone in the M&A process, but it is not the end of the deal. Both parties—buyer and seller alike—still face obligations to each other, as well as to the business in question.

Corporate Finance

Anatomy of an M&A Transaction (VII): A Done Deal: Post-Transaction Planning

By Michael Mercurio Esq., Offit Kurman

What should a seller do after a completed M&A transaction? First, make sure the deal is in fact, done. Have you:

…verified the purchase price?
…fulfilled your restrictive covenant obligations?
…resolved any lingering disputes?
…tied up every loose end relating to your prior role in the organization?

Corporate Finance

Material adverse change in Dutch M&A transactions

By Rudolph A. I. Snethlage, TeekensKarstens advocaten notarissen

Over the past 15 years, there have been several serious events which had a negative economic impact on a global scale. A few examples include 9/11, the bankruptcy of Lehman Brothers and the subsequent credit crunch and recession, not to mention the more recent threat of a Grexit. Imagine being absorbed in closing an important deal and pending completion when, quite suddenly, Greece announces it is leaving the European Monetary Union. Fortunately, your client, who is the purchaser, stipulated that the sale and purchase agreement (SPA) should contain a “MAC-clause”. Does the Grexit qualify as material adverse change (MAC), allowing your client to step back or modify the deal?

Corporate Finance

M&A deals involving Brazilian distressed companies

By Vitor dos Santos Henriques & Thiago Jun Machado, Santos Neto Advogados

Certain sectors of the Brazilian economy are facing deep losses due to inefficient management or lack of alternative financing. In some cases, such as sugaralcohol and industrial equipment supply areas, the companies are demanding judicial recovery, a procedure set forth in Brazilian Bankruptcy Law that is similar to the Chapter 11 in the US.