What Happens During A Business Merger?

There are so many new opportunities and greater scale for growth when you merge two businesses. However, there will be complex questions that you will need to consider too. One of the most important considerations during a merger is what happens to the assets and liabilities of the business? If you get this wrong, it can lead to some unexpected and very costly surprises. It can also lead to unresolved debt or even legal exposure further down the line.

This is why you need to speak to a professional and experienced corporate lawyer, like our corporate lawyers at Burgh Thorpe Solicitors in Peterborough. They can tell you what to expect and what happens during a business merger.

Our corporate solicitors will detail and lay out how ownership is determined. This is essential to have confirmed by a corporate legal expert before either business signs on the dotted line of the merger. They know what happens during a business merger, what to look out for and what to be prepared for.

When two or more companies combine to form one legal entity, this is classed as a business merger. During the business merger process both assets and liabilities need to be accounted for. Examples of assets include things like property, equipment, intellectual property and cash. Examples of liabilities include things like loans, unpaid invoices and legal obligations. These all need to be carefully reviewed and accounted for during the merger process.

One merger option is a share purchase. In a share purchase the buyer will acquire the shares of the target company. In this case, the assets of the target company remain with the company. This is the same for the liabilities of target company, which stay with the company. The buyer will then inherit these as part of the business when the merger takes place.

There is also an asset purchase option in business mergers. An asset purchase is where the buyer acquires only selected assets and assumes specified liabilities. Any assets or liabilities that are not specified in the agreement remain with the seller.

Each option for your business needs to be carefully considered, with a corporate solicitor. This is because there are different implications for risk and control involved in both options. Due diligence in essential. As is clear contractual terms and expert corporate legal advice.

Here at Burgh Thorpe Solicitors, we have a team of corporate legal experts in Peterborough who help clients just like you with all aspects of business mergers. Whether you are selling a business, buying a business or a merging business partner – our corporate lawyers are here to help you. We are here to support you with everything that happens during a business merger.