When one company acquires another, it is referred to as the acquirer, and the company being acquired is known as the target. There are two ways in which a company may acquire another:
- Equity or stock purchases: The acquirer may purchase all of the shares of the target company from the shareholders, resulting in the acquirer taking control of all of the assets and liabilities of the target company. A stock purchase acquisition may be more complicated when there are more shareholders from whom to purchase stock.
- Asset acquisition: This occurs when the acquirer purchases all or a substantial amount of the assets of the target company. Assets can include equipment, inventory, real estate, stock, and other items used to do business. In this type of transaction, the acquirer does not need to take on all assets or all liabilities of the target company, which can help avoid unwanted obligations.
Regardless of the type of merger or acquisition you are considering, an experienced mergers and acquisitions attorney can assist you in preparing for and completing the process in the most effective way possible.
Steps of Mergers and Acquisitions
Despite some ideas or intentions of business owners, mergers and acquisitions ultimately must pass all of the regulatory and legal requirements before they are finalized. Steps involved in mergers and acquisitions include:
- CEOs and top-level management decide to merge with or acquire another company
- Make an offer to the target company
- Pass regulatory requirements
- Close the deal
- Pay any taxes associated with the transaction
This is a general outline of what a basic transaction includes, but many cases are highly detailed and specific. A business law attorney can help companies through this complex transaction in order to eventually produce a stronger, more financially successful business.
Call our office in Cedar Rapids at (319) 366-1000 to schedule your initial consultation and learn how we can help.