We hear about various companies engaging in mergers and acquisitions all the time but what exactly do those two words mean? Webster’s Dictionary defines merger as the combining of two things, especially companies, into one. An acquisition, meanwhile, is defined as an asset or object bought or obtained, typically by a library or museum but it can also apply to companies.
How does a Merger and Acquisition process work?
So how exactly does this process work? Well, first, someone at the company writes a letter of intent, detailing their plans to buy out or merge with a certain company and what they plan to do with the company.
What is included in a Letter of Intent?
The letter of intent (LOI) should also include how much they intend to spend on this merger or acquisition. Also, it should be a handwritten note and should be crafted with the utmost precision.
The important thing to keep in mind is the LOI is not a contract and therefore is not legally binding.
Also, remember that it’s important to represent yourself in the most personable way possible when writing your LOI. Once it’s been submitted, you’ll begin the process of negotiating terms.
What happens during the process of a Merger or Acquisition?
During this process, you may need to disclose confidential information regarding the company to your potential buyer. If you are unwilling to do so, it might look as if you have reservations about a merger with your potential buyer.
The important thing to remember is you should lay all your cards on the table before you close the deal. To learn more, consult our local Palm Springs Mergers and Acquisitions firm.
SBEMP’s Mergers and Acquisitions Attorneys
