Mergers and Acquisitions – 5 Key Considerations

What Are the Key Considerations for Mergers and Acquisitions?

Mergers and acquisitions represent times of major change, disruption and, at times, anxiety for any business – from the very large, to the very small. There is, as you might expect, a lot to think about, and it’s imperative that everything is on your radar early on to avoid disruptions or, worse still, oversights.
Here are just five of the considerations anyone pursuing a merger or acquisition needs to keep in mind.

1. Structure

How you choose to structure the deal will have some significant impacts on the nature of the transaction itself – for instance, whether it’s a share purchase deal or a business purchase deal – and for the transaction’s tax treatment.
Which option is better depends on the nature of the business, whether you are buying or selling and the tax treatment. The business purchase deal offers more freedom for the buyer to choose what assets they acquire, starting from basic office equipment such as photocopiers or business mobile phones through the deal, but it can be a much lengthier process. Then again, a share purchase deal is a simpler structure but, as a result, may require more investigations by the buyer and some negotiations to ensure that the price is right.
This is when an accountant will prove invaluable to ensuring that the process as it pertains to you is kept as tax efficient as possible.

2. Non-Disclosure and Heads of Terms

Two vital documents to be completed during the preliminary stages of the deal. Together, your non-disclosure and your heads of terms will provide a vital and time-saving framework for your negotiations, and the key terms of your proposed deal.

3. Retaining Key Talent

In many cases, a large part of the attraction of any business is its employees. They are, after all, largely responsible for its success and growth, and may well be the key to ensuring continuity during the upheaval of the sale.
That is, provided you can make retaining those key players a priority during this deal. For many people, mergers and acquisitions are daunting prospects, and ensuring that you not only communicate your eagerness to retain your staff, but also incentivise them, is an important step in any merger or acquisition.

4. Intellectual Property

Intellectual property (IP) law is incredibly complex, and constantly evolving. For so many sale agreements the acquisition of the business’s intellectual property rights is fundamental to ensuring that the buyer can gain the most benefit possible from them – or, in other words, the ability to run the purchased business as it was run prior to the sale – but it’s rarely a ‘given’.
To ensure that you will actually be acquiring the rights to the IP in question, you’ll want to do your due diligence, and liaise with corporate solicitors who hold vast experience in advising on mergers and acquisitions.

5. What about the Property?

Whether it’s office, warehouse, retail, or storage space, there’s every chance that the business is currently tied into some sort of leasing agreement right now. If you want to take on that existing lease – or, at the very least, keep the business operating in the same premises – you’ll want to set aside plenty of time to go through your options.