Thinking about a company acquisition? Considering selling a business or individual shares? What exactly does M&A mean, and what key points should you keep in mind during a complex M&A transaction?
For most companies, an M&A process is not an everyday event. That's why we've compiled and explained the most important terms related to this complex topic. Naturally, each detail involves additional legal questions that need to be considered. Feel free to reach out to us; we ensure clarity in confusing situations.
Directly translated, M&A means "Mergers & Acquisitions." In practice, however, M&A encompasses all activities related to the buying and selling of companies. This includes "classic" company purchases and sales, whether in the form of buying/selling the entire company or just a part of it, which could involve majority or minority stakes. M&A also covers mergers of companies, (public) takeovers, alliances, collaborations, joint ventures, succession planning, management buy-outs/buy-ins, conversion measures, or restructurings.
Mergers & Acquisitions can be a strategy to drive growth, enter new markets, or integrate innovations into the company. This can be a particularly effective solution in a rapidly changing environment. However, the success of any M&A process hinges on strategic planning.
It's important to differentiate between the goals of the buyer and the goals of the seller:
Buyer's Goals:
Seller's Goals:
Typically, an M&A transaction proceeds through the following phases:
A Term Sheet is a preliminary agreement. It is generally not legally binding. Importantly, a Term Sheet does not include an obligation to complete the transaction. It simply documents the mutual understanding of the parties regarding selected key points of the transaction and thus has more of a psychological binding effect.
Typical provisions of a Term Sheet include:
In an Asset Deal, the object of the purchase is not the shares of a company (as in a Share Deal), but individual (or all) assets of a company. The term "asset" is broadly understood here – it can include not only items of fixed and current assets but also liabilities (debts, obligations) and contracts.
In a Share Deal, the object of the purchase is the shares of a company – such as stocks, GmbH shares, or a limited partnership interest. In a Share Deal, the company as a legal entity remains unchanged – only the ownership of the company's shares changes.
From the very start of the M&A process, consideration should be given to how the integration of the new company, its employees, and its unique characteristics can be successfully managed. This requires a long-term strategy that takes many factors into account, as well as experienced project management.
