Private company acquisitions and sales differs from mergers and acquisitions involving publicly traded companies in several ways, some of which are advantageous to the parties and some of which create additional complications. On the positive side, there is far less governmental regulation when it comes to the transfer of a private company. However, some of the negatives and obstacles associated with the purchase or sale of a private company may outweigh that particular advantage.
If you are considering acquiring a private company, or if you are a private company seeking to be acquired or have been approached by a prospective buyer, give yourself the advantage of an experienced commercial attorney at your side.
Due Diligence in the Purchase and Sale of Private Companies
One advantage when it comes to purchasing a public company is that filing requirements associated with publicly traded companies ensure at least a minimum level of readily available information about the company and its performance. Not only will there be less public information available with regard to a private company, but that information may not exist at all, or may exist in a format that is difficult to work with.
Further, it is to the advantage of the acquiring company to look beyond the strictly financial and legal information that forms the core of due diligence. Another aspect that may be unpredictable with regard to a privately-run company is the operational structure and company culture. It takes more than a printout to truly understand the company under consideration, and you cannot afford to overlook these more nuanced, less easily documented aspects of the business.
Gathering Information about a Private Company
When you are considering acquiring a private company, it is important that you understand exactly what type of information you need in order to make an informed decision about the acquisition, how to acquire that information and how to know when the information you have been provided is reliable.
Providing Information about Your Company
If you are the company seeking to be acquired, you may be required to provide a significant amount of information to the prospective buyer–information that you may not have assembled in usable format.
Whether you are the acquiring party seeking information or the target company attempting to provide evidence of the value of your company, the experienced attorneys in our law firm can help. Make sure that the data is clear and complete, no matter which end of the transaction you are on.
Negotiating for the Acquisition or Sale of a Private Company
Negotiating for the acquisition or sale of a private company can be more complicated than the negotiation process related to a merger with or acquisition of a publicly-traded company. Although the private company is often smaller and far fewer issues are implicated, the parties to the negotiation often have a much more significant personal investment in the company and its future.
A prospective purchaser may find that the executive team of the target company has personal ties to the company, its employees and its customers that make the negotiation process more emotional and less predictable. The leadership of the target company may have difficulty sorting out practical considerations from those driven by history and connection.
It is beneficial for each party to be represented by attorneys who are experienced in the negotiation of private company acquisitions and sales. The attorneys can help to keep the negotiations targeted and focused on critical issues, and can also ensure that their clients understand the ramifications of their choices in both legal and financial terms.
Drafting of Purchase and Sale Agreements and Other Documents
Acquisition of a company and its assets requires at least one written agreement. Depending on the nature of the business and its assets, the process may involve a variety of other transfer documents. The attorneys in our firm are experienced in the drafting of clear, effective agreements and supporting documents.
Work with an Experienced Commercial Lawyer
Purchasing another company can significantly alter your business operations, provide additional capital, introduce new liabilities, and even impact intangible aspects of your organization, such as company culture and employee morale. Likewise, being acquired can have a wide range of ramifications, from continuing operations subject to someone else’s decision-making to accepting a check and walking away from the company, ready to tackle your next venture.
When you are taking such a big step, you want to be sure that you know what to expect and how to manage all aspects of the acquisition that are within your control. The experienced attorneys at KPPB LAW are here to help you accomplish that.