Calkins Law Firm specializes in representing buyers and sellers in merger and acquisition transactions and privately negotiated investments. When buying a business, our lawyers focus on representing private equity firms, financial sponsors, and strategic investors in negotiating their acquisition of everything from small minority stakes to substantial businesses. When selling a business, our lawyers represent companies, boards, special committees, and shareholders in helping them plan for and ultimately achieve their exit goals.
What is the M&A Process?
While each merger or acquisition transaction is unique, the overall M&A process is similar from business to business and industry to industry. True mergers are rare, so, for ease of explanation, we’ll focus on the business acquisition process.
Identify Criteria for the Business to Be Acquired
Regardless of whether the entity acquiring the business is going with something familiar or looking for the next big thing, they need to know what to look for and how to quantify it. Typically, a buyer has experience in a specific industry and can use that experience to draw up a list of acquisition criteria.
They can do this on their own; however, if they don’t have a lot of experience buying and selling businesses there are things they might overlook or get wrong. A good M&A lawyer can help them develop an accurate list of criteria.
Search for/Find a Business that Meets the Acquisition Criteria
Finding a business that matches these criteria and one where the seller will sell, requires a tremendous amount of connections and prospecting. When properly done, the search is an exhaustive process. It is not unusual for the business acquisition search process to involve reaching out to hundreds of businesses and to take as long as a year or two.
Proposal / Offer / Acceptance
Once the acquisition opportunity has been identified, the parties sign an NDA (non-discloser agreement) or confidentiality agreement and the business to be acquired shares information with the prospective buyer. The buyer then develops a proposal/offer. However, before a proposal can be drafted, they must do a financial analysis to determine what the target company might actually be “worth”. If the offer is acceptable to the seller, the M&A lawyer writes up a letter of intent which sets forth the terms of the sale.
The next step in the business acquisition process is to do extensive due diligence. Proper due diligence means to literally investigate each and every relevant and material detail related to the target business. Proper due diligence is crucial to any successful business sale or acquisition. An experienced M&A lawyer knows where to look and what questions to ask.
Contract & Other Paperwork
Assuming the due diligence process goes well, the buyer’s M&A lawyer drafts the purchase agreement and the accompanying disclosure schedules. Other documents are also typically needed and can include: a real estate purchase or lease agreement, non-compete agreements for the seller and other key employees, and an array of closing documents. All of these ancillary documents will need to be drafted and negotiated, ideally by an experienced M&A lawyer.
The buyer needs to arrange acquisition financing through a bank, third party lender, or the seller. These financing documents (loan agreements, notes, security agreement, mortgages, guaranties, subordination agreements, intercreditor agreements, etc.) need to be carefully drafted and negotiated. When all of that has been completed the transaction can be closed/ consummated with the exchange of signed documents and cash as appropriate.
What to Look for in a Mergers & Acquisitions Lawyer
Calkins Law Firm is a boutique M&A law firm which means our lean-and-mean, seasoned, hands-on approach offers two big advantages:
Every business is unique in their related assets, liabilities and accompanying risks. Only an M&A lawyer who has been-there-and-done-that can fully understand the risks related to mergers and acquisitions and then appropriately limit those risks during negotiations. M&A lawyers like ours, who have been involved in hundreds of transactions, can quickly grasp what matters and then deal with it.
In large law firms your case can have several lawyers involved but no one is actually available and informed. By having a single point of contact from start to finish, our clients find it easier to communicate and stay informed. So when we call ourselves a “boutique law firm” that means better service, less run around, and better communication. Therefore, a less painful process.
The M&A lawyers at Calkins Law Firm strive to build long-standing collaborative relationships based on an in-depth understanding of our clients’ needs and a unique appreciation for their strategic goals. Our lawyers assist with closing our clients’ most creative and cutting-edge deals in a wide variety of industries through every stage of the investment cycle, from due diligence to post-closing integration. Call our office in Chagrin Falls (440) 796-4592, New York (216) 200-7481, or Cleveland (216) 479-6892 today.