If you’re seeking to buy or sell an existing business entity in Florida, there’s a good chance you want to accomplish this goal through either a merger or acquisition. The route you take depends upon a number of factors, and one of the most important is what’s best for your needs and those of your company.
Though the Florida Business Corporation Act’s section on merger goes into great detail on the legal requirements, it doesn’t offer any guidance that’s useful for your specific situation.
Because of the complicated issues involved with these transactions, it’s wise to rely on a Florida mergers and acquisitions attorney for assistance throughout the process. You might also find it useful to review six important things to know about small business mergers and acquisitions.
“I tell my clients to focus on the end results they want to see in a business transaction. It’s my job to figure out the best transaction structure to accomplish my client’s goals.”Trevor Brewer
1. Mergers and acquisitions are different structures:
A merger integrates two companies into a single, new business entity, combining the assets, liabilities, and some executives and personnel of each entity. Though there are creative ways to structure the transaction, a true merger is rare because of the challenges faced by separate organizations that want to become one. In an acquisition, a target company is absorbed by the entity that’s purchasing it, usually through a stock or asset acquisition.
2. You must determine the right structure for your needs:
Based upon the differences between the two, you can see how you’ll need to make the right choice between a merger and an acquisition – regardless of whether you’re the target or the acquiring organization. If you want to continue operations alongside another business, you’d opt for a merger. When an acquisition makes more sense, you must then determine whether a stock purchase, asset acquisition, or blend of the two would be appropriate.
3. A business valuation is essential:
Financial considerations are a key motivation when considering a merger or acquisition, so you’ll need to arrange for a business valuation to determine what the other company is worth. A CPA or other business appraisal professional may take different approaches in conducting such an assessment, so you should agree in advance on the basis you want to use.
4. There are certain requirements for the Merger or Acquisition Agreement:
There are some mandates addressed by law, while others are just smart to include when you’re involved in a merger or acquisition transaction. Obvious issues include the purchase price and how it will be paid. However, some additional key points you should include are:
- The business valuation method, as described above;
- How debts, contracts, and liabilities are distributed;
- Employment issues involving current employees and executives;
- What happens to intellectual property;
- Tax matters;
- Representations and warranties regarding the business;
- Liens and third-party contracts; and,
- Much more, depending on your circumstances.
5. You may need to obtain multiple approvals:
Regardless of what form the transaction takes, you must at least review the possibility that you’ll need approvals for a merger or acquisition. For instance:
- Stockholders may need to consent to any arrangement that affects their holdings. In some situations, you may be required to obtain approvals for every shareholder in accordance with their ownership interests.
- For some transactions, you’ll need to get approvals from the Board of Directors.
- In the case of third-party contracts, including agreements involving key employees, you must assess the documents to determine how the merger or acquisition could be an issue.
6. There are certain tasks involved with transferring business ownership
Once you complete a merger or acquisition, you must file the appropriate documents in the State of Florida. You’ll also need to review any changes regarding tax issues with the IRS. Other administrative tasks include changing the taxpayer ID number for business bank accounts, changing title and ownership on company assets.
Any insurance policies should be adjusted to include the name of the entity that results from the transaction, and you must check to ensure all business licenses reflect the new arrangement.
Consult with a Mergers and Acquisitions Lawyer in Orlando, FL Today
Of course, there are many additional matters you need to know about small business mergers and acquisitions in Florida, so it’s important to work with skilled legal counsel from the earliest stages. You can trust our attorneys at Brewer Long Business Law to explain the relevant legal issues and protect your interests from start to finish in this type of transaction.
To learn more, please call 407.660.2964 or go online to schedule a free consultation. Our team serves business clients throughout Central Florida and the Orlando area out of our Maitland, FL office.