The internal growth of corporate groups and companies is limited. Mergers and acquisitions (M&A) are intended to prevent stagnation, but there are obstacles to overcome in the process.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Corporate transactions in the manner of mergers and acquisitions can be found in every industry. In this way, supermarket chains, industry and service providers wish to grow and thus solidify and strengthen their market position. Aside from the economic aspects, legal regulations also need to be observed with these types of transactions. Infringements of antitrust law, for instance, can pose an obstacle to a corporate takeover.
Wirtschaftswoche reported that mergers and acquisitions experienced a boom last year. One reason for this could be the persistently low interest rates which make these kinds of costly transactions possible. According to the report, Germany has experienced the strongest M&A market since the 2008 financial crisis.
It is generally the buyer that bears the risk when it comes to corporate transactions. The economic benefits and risks associated with corporate transactions should therefore be weighed up within the framework of a due diligence review. This will shed light on the strengths and weaknesses of the object of the takeover and enable an appropriate purchase price to be ascertained on the basis of the data obtained. Existing employment contracts, orders, liabilities and the tax implications need to be taken into account in the process. In the case of international transactions, it must also be kept in mind that another set of national laws applies and these ought not to be infringed.
In the context of corporate acquisitions, a distinction needs to be made between share deals and asset deals. In the case of an asset deal, all of a company’s business assets are purchased. A share deal might, however, be the more sensible option. Here it is only the shares of a company up for sale that are acquired. It may be the case that these shares can be much more effectively assimilated into one’s business than would be the case with a complete takeover.
These kinds of corporate transactions are time-consuming and necessitate sound economic and legal advice due to their complexity. Lawyers who are competent in the fields of company law, commercial law and international law can assist businesses.
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