Mergers and acquisitions are the techniques used by companies and corporations to legally unite the ownership of company assets that were from former companies as well as divided the control of said company or corporation.
A merger and an acquisition are pretty much the same thing. What happens is that often a larger company will completely take over the less important company and it will become part of the larger company. This means that the company that was less important no longer exists while the other company remains. The larger company or one that took over the other company has all the rights liabilities, and privileges of the merged companies. On the other hand, when you merge a company it is not the same as consolidating. When you consolidate companies they both lose their original identity and become a completely new company. The laws regarding mergers and acquisitions require the experience of business lawyers such as SteinepreisPaganin to ensure the legality of all documents of the merger or acquisition.
Acquisitions and mergers are regulated by state and federal laws. The regulations are used to aid in ridding any type of competition that might arise between the two corporations that are merging. In most cases, these laws are in place for corporations that are rivals and the courts believe that these agreements are often done to stop one company while increasing prices. Since this is the case, that it is believed that mergers reduce competition, the US government watches any proposed joining with a very fine-toothed comb to ensure that all is legit. On the other hand, the government is a bit more lenient than it was before the 1980’s. In the majority of cases, the United States law allows companies the freedom to purchase or sell parts of a corporation or an entire company, even though the fear is still present concerning reducing competition.
There are different types of acquisitions and mergers that can aid corporations including a horizontal merger, vertical merger, and conglomerate merger. A horizontal merger will buy a company that creates and sells products that are the same or close to the ones they produce in the same area or state which will stop the competition. A vertical merger is in which a corporation will purchase only a customer or a supplier while a conglomerate merger is when a company purchases another one that has nothing in common with the company they are purchasing.
All types of mergers are quite complicated and that is the main reason that you need an attorney that has experience. If all documents are not correctly written one corporation may not be protected under the law which can cause other issues in years to come. So, for corporations that are looking into merging with another, it would be in your best interest to speak with an attorney that will do all the background checks and more to learn about the company that you wish to purchase or join.