In cases involving M&A transactions, a detailed evaluation of the economic risks and opportunities as well as the associated legal issues is indispensable.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Last year, there was a significant increase in the volume of M&A transactions. Analysts expect the market to remain buoyant this year as well. Even if the world economy suffers an economic downturn, the ongoing low rate of interest continues to provide an attractive framework for takeovers and mergers in a wide variety of sectors. The technology sector is likely to be of particular interest to investors.
In the case of corporate acquisitions or takeovers, the economic risks and opportunities associated with the transaction need to be precisely evaluated. Additionally, an assessment of the legal situation also has to form part of the evaluation, especially with a view to possible antitrust violations.
The basis for fixing the purchase price ought to be an extensive due diligence review, in the course of which a precise assessment of the strengths and weaknesses of the takeover target is conducted. Factors such as the current as well as the prospective economic situation, the order situation, technical developments, but also existing liabilities, existing agreements, the tax implications of the takeover or judicial proceedings need to form a detailed part of the analysis so that a fair purchase price is eventually set. It is equally crucial to assess whether an asset deal or a share deal is the more appropriate option.
It is particularly important to consider the national legislation of various countries in cases involving international transactions. Particular attention must also be paid to the matter of whether the planned M&A transactions could give rise to infringements of antitrust law.
The high degree of economic and legal complexity associated with M&A transactions renders it necessary to obtain interdisciplinary legal advice. Ideally, this should come from a single source of law firms with lawyers who are competent in a wide variety of legal fields, can offer client-oriented solutions and have connections to international networks featuring renowned law firms. This ensures that the clientele receives comprehensive support, which is the basis of success when it comes to M&A transactions.
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