A Merger & Acquisition strategy can help set clear expectations for all involved. While each deal is unique, any strategy should address what your company hopes to achieve with the deal and how it will get there.

During this phase, legal teams must research and evaluate potential target companies. Knowing who and what is involved and how the pieces are related will help guide the due diligence process.

To properly value and determine the suitability of the target company in line with the M&A strategic plan, legal teams need access to as much information as possible regarding the target’s operations, customers, financials, products, and more. Once the entities are known, the next step is to find out if they are in good standing and in compliance with all jurisdiction requirements. If not, it could be a deal breaker. Assess whether the issue(s) can be resolved and the time frame for moving forward.

Once valuation models of the target company have been produced, your firm can present an offer and move onto the negotiation phase where terms are discussed in more detail.

This is usually the most time-consuming and critical part of any M&A transaction. M&A due diligence requires a detailed examination and analysis of the target company from both internal and external sources. This helps verify the target’s value and identifies liabilities.

With due diligence complete, parties make the final decisions on moving forward to execute the transaction. For legal teams, this comes with several responsibilities. Corporate or pre-clearance filings must be made in advance of the closing date. These include merger filings, amendments, ordering of good standings, or issuance of bring-down letters. Payment of filing of annual franchise taxes may also be required for an entity to properly merge.

Although financing options were explored during the M&A planning process, the final details typically come together once the purchase and sale agreement are complete. To help you avoid delays and ultimately close the deal, an independent director/manager, springing member, or special member may be appointed. These directors serve on the boards of your entities to safeguard your assets. During this phase, you must also file UCC1 and UCC3 forms and conduct post-closing searches to ensure proper indexing of the filed UCCs.

Managing the integration of an acquired company is a full-time job. Both parties should work together to ensure a seamless integration. For legal teams this means entity planning and compliance work in the localities involved. Tasks include: Entity set-up, consolidations, local entity management, governance structure changes, UBO registrations, KYC compliance, annual filings, registered agent/address services, legal representation/directorship services where required, and more.

Post-merger integration is often overlooked but is a critical task to reaching a “business as usual” goal and is a determining factor in the success or failure of any deal. After the long cycle of completing a merger, there is still so much to do. Often, the compliance requirements associated with the surviving and non-surviving entities are the last items to make the list – if at all. In fact, most companies aren’t aware of what’s needed beyond receipt of evidence of the merger. Unfortunately, post-merger compliance is a critical and complex series of activities, and not completing the steps poses significant short and long-term risks.

Once the merger is complete, it’s important to continuously monitor the success of the newly established entity with ongoing good standing and health checks to ensure there are no compliance issues.