A merger and acquisition transaction may be structured as an asset purchase, stock purchase, or a merger transaction. Furthermore, the transaction may involve the full acquired business or it may be structured to acquire only a part of the business.
Considering the parties involved in the transaction, mergers and acquisitions can be generally classified as vertical (parties supplying different points on the supply chain), horizontal (similar products and services), concentric (shared customers), market-extension (such as serving different geography), conglomerate or product-extension (adding products or services). The benefits of each vary and depending on your strategy these could include: building economies of scale, increasing market share, decreasing competition, boosting efficiencies, expanding product lines, or diversifying offerings. There are also, however, negative connotations associated with these transactions which should also be carefully considered, such as possible lack of synergies, varied cultures, overlap in expertise, cost of consolidation, assumption of liabilities, duplicative suppliers, vendors and contracts, and whether the transaction will be accretive or a dilutive transaction and many more such issues.
Merger and acquisition transactions tend to favor the buy-side business that proposes to acquire the sell-side acquisition target. This is often due to larger size and the opportunity to exercise leverage inherent in bringing liquidity to a prospective capital transaction. The larger acquirer, also, often enjoys the advantage of greater experience in similar capital transactions.
Understanding which type of merger or acquisition will best support your long-term strategy requires a careful look at the pros and cons and the support of an expert advisor for guidance. Attorneys at HPKD are experts in negotiating strategies, they will assist you in seeing all of your options to ensure you are setup for success in the long run.
Call Now For A Free Initial Consultation