CHAPTER 16 Structuring M&A Deals
Building Blocks for Structuring an M&A Deal
The basic building blocks for structuring merger and acquisition (M&A) deals are: asset sales, stock sales, and mergers. All are legal means to transfer ownership of a business from a seller to a buyer. All have unique characteristics in a deal structure, which can be used to achieve or avoid particular results.
In addition to the corporate structuring issues discussed in this chapter, tax analysis plays a critical role in structuring the transaction. Tax is a complex and separate topic that is not dealt with in this book. Industry-specific regulatory regimes, such as banking or public utility regulation, also play important roles in structuring deals for regulated companies.
Asset Purchase
To purchase a business, the buyer could acquire all the assets and rights related to the business that the target owns. In an asset sale, specified assets and liabilities of a target are transferred to the buyer. The target company (rather than its shareholders) is the counterparty to the agreement, since the target is directly selling its own assets. As a result, the target (rather than its shareholders) is entitled to the deal consideration. The target may use the proceeds for other business purposes, or may distribute the proceeds to its shareholders.
What assets?
An asset sale requires the parties to specify ...
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