Mergers and Acquisitions

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Mergers refer to combining two previously separate companies into a consolidated single new entity. This allows the companies to join their operations, assets and human capital. In a merger, the original companies cease to exist independently and are absorbed into the new merged firm.

Mergers can take the form of consolidations, where both companies dissolve and contribute assets to create an entirely new legal entity. This structure is used when the goal is to create a new brand and identity.

Alternatively, one company can survive the merger by essentially acquiring the other firm’s operations and absorbing them into their existing business structure. The acquired firm legally ceases to exist.

Acquisitions refer to situations where one company purchases or takes over another company’s operations. The acquired company may operate as an independent subsidiary under the acquiring company’s ownership and control. Or it may be fully absorbed and integrated.

Acquisitions, unlike mergers, do not necessarily dissolve the target company. It can maintain brand identity while coming under new ownership. Acquisitions may be mutually agreed or friendly deals. But hostile takeovers without the target’s consent also occur during acquisitions.

Both mergers and acquisitions allow companies to expand rapidly by joining forces with or absorbing other organizations quickly. They provide faster growth than organic expansion. Legal execution is key.

What are Mergers and acquisitions ?

As we have been saying, mergers refer to combining two separate companies into a single new entity. Acquisitions mean one company purchases or takes over another. Both routes allow rapid business expansion.

Mergers can be structured as consolidations, where both companies dissolve and create an entirely new entity. Or one firm can survive post-merger by absorbing the other company’s operations.

In acquisitions, the target company either becomes part of the acquiring firm or remains a subsidiary. Acquisitions may be friendly, mutually-agreed deals or hostile takeovers pursued without the target’s consent.

Key Benefits of Mergers & Acquisitions

The strategic rationale behind M&A deals typically includes realizing economies of scale by combining operations and reducing costs. It also involves quickly expanding into new geographical markets or industry segments by acquiring an established player. Additional benefits are acquiring innovative technologies developed by the target company and diversifying products and services to widen the overall portfolio. Finally, certain asset transfers may carry tax advantages that can be leveraged.

Stages of the mergers and acquisitions Process

Conducting thorough due diligence is vital before signing any Mergers and acquisitions deals. The typical process stages include setting the strategic objectives, like expanding regionally through an acquisition. It also involves identifying optimal target companies that meet defined criteria. Performing valuation analysis helps assess the target’s true market value. Conducting due diligence on legal, financial and operational aspects is critical. Other key stages are structuring the transaction and negotiating agreeable terms, securing financing and credit lines to fund the deal, and navigating regulatory approvals, contract signing and legal completion.

Our Expertise in Mergers and acquisitions Transactions

As experienced corporate lawyers in Spain, we guide UK companies through executing successful M&A transactions. Our support covers assessing the commercial viability and merits of potential deals. We also lead due diligence and valuation of the target company. Other areas are advising on optimal deal structuring and negotiating favorable terms, drafting water-tight contracts and navigating regulations, securing financing approvals and mitigating tax exposure, as well as facilitating post-merger integration of operations and systems.