Legal Differences Between Mergers and Acquisitions in New Port Richey

Entrepreneurs often mention mergers and acquisitions in the same breath, but there are notable differences between these two processes. It might be helpful for business leaders to review some of these differences, especially from a legal perspective. A greater understanding of these distinctions may help entrepreneurs choose options that serve their business’ best interests. Contact an M&A lawyer in New Port Richey for more information.

A Merger Creates a New Company

One of the most important things to remember about a merger is that it will result in the creation of a new company. In this type of arrangement, neither company is the “junior partner.” Both entities may pool their resources, networks, and experience levels in a roughly equal manner for mutual benefit.

The legal implications of a merger might include new tax issues. A merger might also create new issues for pensions across both companies, as these pensions will have to be consolidated under a single banner. The same logic applies to differing employee benefits across both companies.

Perhaps one of the most important legal considerations during a merger is the threat of antitrust laws. These laws prevent monopolies from forming, and this might be a valid concern for US regulators if two companies were to eliminate all competition if they joined together.

Acquisitions Represent “Exit Strategies” for Business Owners

While a merger allows both companies to grow together, an acquisition represents a common “exit strategy” for a business owner seeking to cash out. For most entrepreneurs, the goal is to build a company up and then sell it for a huge profit. The owner then steps away from the company entirely.

Because the focus is on selling the company at a fair price, the legal considerations focus more on due diligence and sales contracts. However, mergers and acquisitions can both raise antitrust concerns.

The Line Between Mergers and Acquisitions Is Eroding 

According to Investopedia, the two terms have become “increasingly blended,” and the line between these two concepts is blurry. Modern corporate restructurings are often referred to simply as M&As, with both terms used in the same breath. This is due to new approaches to mergers and acquisitions.

Friendly vs. Hostile 

Some also view mergers and acquisitions in the context of “friendliness” and “hostility.” A merger is a friendly restructuring because both companies mutually agree.

Can an M&A Lawyer in New Port Richey Help Me? 

Whether you choose a merger or an acquisition, a lawyer may be able to guide you toward positive outcomes. Consider working with a New Port Richey M&A lawyer if you’re serious about navigating this legal transaction in an organized way. Legal assistance could reduce the chances of disputes and issues in the future. Contact Athanaselos & Associates, P.A. for more information.

Source: 

investopedia.com/ask/answers/021815/what-difference-between-merger-and-acquisition.asp