When shares of a company are being purchased or sold, the parties involved often sign a stock purchase agreement. A stock purchase agreement is designed to protect both parties by laying out the unique terms of the agreement, including the par value of shares, when and where the transaction takes place, the number of shares being sold, and any warranties made by the seller or purchaser. To ensure that the agreement process goes off without a hitch and that both parties are satisfied, consider hiring a mergers and acquisitions (M&A) attorney to obtain essential legal counsel and security.

Why Hire an M&A Attorney?

A mergers and acquisitions attorney wears many hats. This person should act as a primary point-of-contact for all members of the deal and has the main responsibility of helping close the transaction. In addition to reviewing the financing aspect for mergers and acquisitions, M&A attorneys also provide invaluable advice relating to drafting and negotiations of contracts for stock purchase sales. A good M&A attorney will also share his or her knowledge of mergers and acquisitions law on a local, state, and federal level.

An M&A attorney can provide the following services:

  • Advisement: When you hire a mergers and acquisitions attorney to assist with a stock purchase agreement, you can rest easy knowing a legal professional is looking out for your best interests. As your advisor, the M&A attorney will closely assess each company interested in participating in the transaction and ensure that all parties are in good financial standing. An attorney can also alert you to possible red flags that could cause a delay or stop in proceedings. If needed, he or she can recommend possible changes to prevent problems from developing.
  • Mediation: With a mediator present, parties are able to discuss any concerns or disputes either may have with a stock purchase agreement with the assistance of a trained impartial third person who can help them reach a mutually beneficial settlement. When a mergers and acquisitions attorney is involved in the deal, all aspects of the deal will go through counsel for review, thereby ensuring that all aspects are approved before progressing forward.
  • Negotiations: The negotiations involved in a stock purchase agreement transaction can sometimes be long and complex. It is the responsibility of an M&A attorney to deal with negotiations between the involved parties and help the deal close in a satisfactory manner. Compromise may be required along the way, and a trusted attorney can make sure that these compromises are fair.
  • Drafting: The documents involved in a mergers and acquisitions agreement can be numerous. From letters and registrations to term sheets and contracts, each of these carefully written items must be gathered, organized, and reviewed to spot possible mistakes and to ensure that no essential documents are missing. An M&A attorney can assist in the drafting of these important documents to make sure all wording, punctuation, and grammar are correct to prevent potential disputes.

Stock Purchase Agreements

A stock purchase agreement is a common way for one company to acquire another company. The acquisition of a company via stock purchase allows buyers the opportunity to purchase less than all of the seller’s available shares and essentially force a sale through a statutory short-term merger. Different than a buyer involved in an asset sale, a buyer who purchases stock accepts ownership of a company, as well as its assets and liabilities. This means that if any money was owed to creditors before a sale, the buyer will still owe this money after the sale. These are important aspects to consider when developing a stock purchase agreement.

Going through an M&A deal without the help of an experienced mergers and acquisitions attorney can be an overwhelming experience. After compiling a list of suitable buyers or sellers, you must contact these professionals to discuss their possible interest. A pitch then should be made, followed by a ‘teaser’ that contains just enough information to pique the buyer or seller’s interest. Both parties must then sign a confidentiality agreement and submit an indication of interest (IOI). The M&A process may also involve management meetings between the buyer and seller, a period of due diligence, and the development of the purchase agreement.

Contact an M&A Attorney

Before a deal can be closed on a stock purchase agreement, there are a lot of papers that must be signed, information to be reviewed, and negotiations to be made. While all of this can be accomplished without the help of an attorney, doing so leaves a lot of room for possible errors that could cause your company financial harm. To help make sure that the stock purchase agreement is completed correctly and without shortcuts, it is important to hire a mergers and acquisitions attorney.