This article is intended to clarify the meaning and legal procedures of mergers and acquisitions for amongst others, law practitioners. Every year thousands of mergers and acquisitions transactions take place across the globe.The merger and acquisition process is quite lengthy and involves a lot of paperwork, including agreements, due diligence and contracts. Learn more about this matter here.
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What is meant by merger and acquisition?
It is noteworthy stressing that the issue of mergers and acquisitions has been one of core areas of commercial law. Generally speaking, merger and acquisition refers to the consolidation of companies or entities through various types of financial transactions. It is mainly known or considered as “company marriages”.
What is the difference between merger and acquisition?
Fundamental problem about mergers and acquisitions is that law practitioners including merger and acquisition lawyers and even law firms are confused about their meaning. Indeed mergers and acquisitions are used interchangeably. Nonetheless they do not have the same meaning. Indeed in a merger, two separate entities combine with a view to creating a new legal entity. Meanwhile an acquisition refers to the takeover of one entity by another.
What are the 3 types of mergers?
In the process of a merger two or more companies make a clear decision to come together. In general, there are three main types of mergers :
- horizontal mergers increasing market share,
- vertical mergers creating synergies,
- concentric mergers expanding the product offering.
What are basic forms of acquisitions?
In the process of an acquisition, a financially larger company acquires shares of another company to take over it completely. When we take a look at the most popular ways of acquisition, there are four types of completing the acquisition process:
- horizontal acquisitions,
- vertical acquisitions,
- conglomerate acquisitions,
- market extension acquisitions.
What are the 3 stages of mergers and acquisitions?
There are three main stages:
- combination (involving the integration of companies) and
- full integration (setting up the new entity).
What is the importance of mergers and acquisitions?
We will respond to the question of what are the main reasons for mergers and acquisitions at this stage. Companies use mergers and acquisitions as a leverage on the following grounds:
- facilitating growth,
- creating synergies,
- enhancing capacity,
- taking advantage of tax benefits,
- increasing strength and power of the company ,
- accessing to new markets.
Which authority is responsible for mergers and acquisitions procedures?
In most countries, a specific national authority is established with a view to supervising and monitoring relevant procedures. Likewise the Competition Authority is authorized to prevent cartelization and to provide the well-functioning of market mechanisms in Turkey. There are some types requiring the notification to and the authorization of the Competition Board in Turkey.
What are the five main steps for a merger and acquisition procedure?
- The provision of legal guidance and advice from a law firm
- Selection of one from both: merger or acquisition
- Fully-fledged analysis of legal requirements laid down in national legal frameworks through assistance of the concerned law firm
- Initiate proceedings for the combination and integration
- Re-start your business life with your newly-born firm
To sum up, mergers and acquisitions is one of the most lucrative markets in the legal industry. Overall, this paper aims at addressing the complete legal process, types and main stages of mergers and acquisitions. It is significant to underline that the said subject is strongly related to various sub-branches of law, among others, commercial law, competition law, economic law, labor law, capital markets law. Therefore, mergers and acquisitions represent a very high-level complex issue and need an extensive consultation for every single stage of the concerned legal process. The targeted proposition of merger and acquisition plans, the well preparation and realization of merger and acquisition agreements, as well as effective organization of merger and acquisition negotiations within the context of national legal requirements are necessary. For this reason a comprehensive legal guidance at every stage is needed for a successful merger and acquisition transaction.
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