Mergers and acquisitions (or M&A) are transactions of changing ownership between two companies, wherein a merger is a combining of two companies and an acquisition is one company buying another. Basically, M&A involves the process of combining two companies into one. The purpose of combining two or more businesses is to try and achieve synergy – where the whole (new company) is greater than the sum of its parts (the former two separate entities).
The merger is achieved by the absorption of one or more companies or by merging two or more companies.
The companies participating in the merger process must draw up a draft merger which will include several elements, including:
– the form, name and registered office of the merging companies;
– the substantiation and conditions of the merger;
– the conditions for allocating the shares.
What steps must be followed to implement a merger?
An important aspect is the impact of that merger on the competitive market environment in which the entities involved operate. Thus, it is important to analyse the need to obtain the agreement of the Competition Council regarding the operation considered before its effective implementation. In the following we will briefly present the steps (regulated or optional) that must be observed in case of a merger:
Feasibility analysis
The law does not regulate such a stage in the merger process, but in most cases, it proves to be extremely useful in order to prevent any legal, fiscal and financial-accounting problems that may arise during the process.
From a legal perspective, as a rule, all the elements that are included in the patrimony of the absorbed company / s are analysed in order to determine the conditions, restrictions and formalities that must be considered for the valid transfer of each of them. Among them we can list:
– real estate assets: to identify possible encumbrances (for example: mortgages) or prohibitions that may affect those properties as well as the formalities necessary to obtain agreements for their transfer;
– contracts: to determine the conditions under which those contracts may be transferred;
– licenses and authorizations: in order to identify the documentation needed to transfer or update the licenses and authorizations under which the participating companies operate and the impact of these changes on the merger process (eg transfer of licenses may take several months);
– labour relations: to identify the rights of employees transferred as a result of the merger (rights which cannot be diminished as a result of the reorganization process) and to see if consultations with the trade union or employee representatives are needed;
– financing and insurance: to identify the conditions under which financing and insurance contracts can be transferred (in most cases these contracts cannot be transferred without the consent of the financing bank or the insurer).
Implementation of the merger
The procedure provided by the Companies Law consists of two main stages and lasts between 6-9 months depending on the complexity of the process:
– In the first stage of the merger, the associates / shareholders of the participating companies will in principle approve the start of the process and will mandate the directors of the companies to prepare the merger project. The draft merger is submitted to the Trade Register Office at the headquarters of each company to be published in the Official Gazette.
– In the second stage of the merger, the associates of the participating companies give their final agreement on the merger, and the documentation to be submitted to the Trade Register will be prepared. The merger file is forwarded to the competent court, which will rule on the legality of the merger. The final decision approving the merger shall be forwarded by the General Court to the Trade Register, which shall record the merger entries in the Trade Register and issue the de–registration certificates for the merged companies.
Lawyers specialized in mergers and acquisitions
M&A lawyers assist their clients with the appropriate financing for mergers and acquisitions and provide advice concerning the drafting, negotiation, and performance of the contracts for the sale of portions of the business. At the same time, the experience of the M&A lawyers must include a wide range of corporate transactions for a large portfolio of clients, international companies or local companies, in complex projects of mergers and acquisitions. Both commercial law and business law represent a key indicator for the current economy. Precisely for this reason, a good knowledge of all the provisions by a lawyer in mergers and acquisitions ensures the success of a company.
Our experience in M&A
Over the past few years, our company, Hammond Partnership, has provided legal assistance and consultancy on various national and cross-border transactions, including mergers and acquisitions, partnerships and operations for the purchase or sale of participants in the corporate capital of companies.
Our lawyers have acquired specific knowledge in business law. Therefore, lawyers from Hammond and Partners successfully combine legal skills with a unique understanding of the applicable legal framework.
