When considering a merger, acquisition, or divestiture, significant responsibility rests with a company’s managers and board of directors. Much is at stake for the firms, employees, and shareholders or members involved. Minimizing and mitigating company risk is essential toward achieving a successful transaction and affecting a seamless transition.
Limited liability company Managers, limited and general partners, corporate executive officers, and members of the Board of Directors frequently engage outside services to assist in the merger and acquisition (“M&A”) process. Attorneys often serve as trusted advisers by gathering information, offering objective viewpoints on specific issues, and proactively managing legal risks involving the company’s strategic plan.
Oversight and Governance
The main responsibility of a company’s management team during the M&A process is to focus on oversight and governance in an attempt to protect and enhance shareholder or member value. Protecting the duty of care and duty of loyalty owed by the Managers and/or Board of Directors is just as important and assisting in navigating the complicated documents.
When reviewing plans for a proposed merger or acquisition, the Manager or Board of Directors must exercise duty of care with respect to compliance obligations and mandatory disclosures. This requires them to seek advise on any terms, conditions, obligations etc. that they do not fully understand, in order to ensure compliance. Duty of loyalty requires that the Board of Directors or Managers act in the best interests of the company as opposed to making decisions that further their own personal interests. which can be accomplished by having outside counsel oversee legal aspects of the proposed transaction.
As part of its oversight role, the Manager or Board of Directors should evaluate the proposed transaction to ensure it is in line with and furthers the company’s overall long-term strategic plan. Managers and the Board of Directors are sometimes told that a proposed transaction will produce significant business opportunities, increase in profits, etc. only to find those claims are not realistic or that the new opportunities are not in line with the company’s goals, values, or mission.
JLG works with Managers, members, limited and general partners, corporate executives, and members of the Board of Directors to help determine whether a merger or acquisition is worthwhile in terms of potential synergies that are created by cost savings and increased revenue.
Due Diligence Support
The primary objective of the due diligence process is to provide the buyer the opportunity to evaluate all relevant information concerning the risks and opportunities relating to an entity before a deal is consummated. The sharing of a substantial amount of confidential and material non-public business information is required. As such, proper control and management of the information-sharing process is critical to not only the M&A success but security and confidentiality of the shared information.
The process begins in earnest once negotiations reach the point where an offer is expected to be made. Due diligence includes a review of such things as proper formation and other governance documents, legal and compliance issues, actual and potential tax liabilities, valuation, financing, vendor relationships, and cybersecurity, among other things that may be unique to each individual business.
JLG adds value to the due diligence process in many corporate transactions by combining an objective viewpoint and unwavering trust. Our team delivers results by making certain all necessary information has been obtained, reviewed, and assessed. We provide specialized insight and advice to ensure compliance with all federal and state laws and regulations carefully manage risks.
Executives and boards of directors find that having a third party gather and review relevant information is one of the most valuable contributions made in support of the M&A process.
The success or failure of an acquisition depends largely on the professional expertise and attention to detail of those involved. JLG can help. To schedule a consultation, call us today at (619) 298-2880 or visit our website at jackolg.com.