Mergers & Acquisitions – An Effective Strategyfor Growth and Sustainability…and Issues
Related to ImplementationNovember 17, 2010
Legal AspectsPaul A. Krulisky
([email protected]) (602) 916-5330
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Legal Considerations
After the target company is identified the work continues
Letter of Intent Further Due Diligence Transaction Documents
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Transaction Structures
Mergers Stock Sale Asset Sale Isolate Assets / Liabilities Assignment Issues / Change of Control Due Diligence Continues
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Purchase Price Adjustments
Working Capital Adjustment Net Asset Adjustment Debt Adjustment Holdbacks Earn-outs
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Representations and Warranties
Tailor to Deal Required Consents
○ Contract Requirements○ Governmental
Intellectual Property○ Owned / Licensed○ Exclusivity○ Infringement
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Personal / Real Property Material Contracts Insurance Taxes Litigation Conduct of Business Prior to Closing
Representations and Warranties
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Representations and Warranties
Knowledge / Materiality Qualifiers Survival Period
○ General – one to two years○ Tax, environmental, etc. – Applicable Statute of
Limitations○ Due organization, authority to enter into
agreement – no limit
Disclosure Schedules
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Indemnification
Seller○ Representations, warranties, covenants○ Possible Exclusions in Disclosure Schedules○ Baskets / thresholds○ Caps / limitations
Buyer○ Representations, warranties, covenants○ Conduct of the business after closing
Holdback Third Party Claims
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Conditions to Buyer’s Obligations
Representations and warranties Disclosure Schedules acceptable No Adverse Proceeding No MAC / MAE Due Diligence review Consents / Approvals
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Other Matters
Nondisclosure of Confidential Information Noncompetition / Nonsolicitation Agreement Key Employees of Target Integration with Existing Operations /
Capturing Synergies