Mergers and Acquisitions
JPR Advocaten employs experts working on mergers and acquisitions of all kinds every day. If you would like to transfer your company or acquire a company, then we recommend looking for legal advice. To this end, also visit company acquisition. If you do not, then you could be faced with some unpleasant suprises after the transfer. Even if you are transferring a company or companies within your family, or manage a company and acquire the company via management buyout. In these cases, it is also useful to employ a lawyer specialised in mergers and acquisitions.
Mergers and acquisitions are not solely about the acquisition contract, but must also map out the consequences for, for example, the personnel, lease contracts, supply contracts and partnership contract. In order to ensure that all legal aspects are mapped out correctly and that you are assisted quickly and properly, JPR Advocaten has a team of lawyers at the ready for all mergers and acquisitions. Lawyers who have specialised in a range of legal fields.
Which legal documents will you encounter in mergers and acquisitions?
The most common terms, documents and steps you will encounter in mergers and acquisitions are:
- NDA (Non-Disclosure Agreement) / confidentiality agreement: the confidentiality agreement is usually signed first prior to the negotiations for all mergers and acquisitions. This is the case to ensure no sensitive company information of the party that is sold in particular is made public. If you are the selling party, then always make sure that this is signed and cover a breach of confidentiality with a penalty clause;
- LOI (Letter Of Intent) / declaration of intent: If two parties already generally know that a merger or acquisition will take place, but the purchasing party does not yet have all the information, for example, then the intentions of the parties can be recorded in a letter of intent. Depending on the text of the letter of intent, the parties will be obliged to commit to specific agreements. The letter of intent then also directly includes which conditions need to be met in order to achieve final agreement;
- Due Diligence research: The due diligence research is performed by the purchasing parties in mergers and acquisitions. This research fully examines the entire company to be acquired so the purchasing party has a good idea of what they are purchasing. The selling party grants their cooperation by giving access to the company's administration and providing all further explanations requested. This access can be granted in various ways. Usually, parties opt for a digital form of information provision by means of a so-called data room;
- Acquisition agreement: Once the due diligence research is complete, an acquisition will need to take place. In such a case, shares or assets can be transferred. All agreements in this respect are recorded in an acquisition agreement. Depending on the transfer, there will be either an asset agreement or an agreement arranging the transfer of shares. For larger acquisitions, a so-called SPA, or Sale Purchase Agreement is used. An SPA is the actual purchase agreement that records what is transferred at which price and under which conditions. Oftentimes, an SPA becomes very sizable the moment all sorts of guarantees and indemnifications are granted for the provision of shares, for example. These guarantees and indemnifications will be issued to insure the purchase price, which has been set based on the due diligence research. Should it later turn out that the information provided was incorrect or should it turn out in advance that the information was insufficient, then a buyer will want to ask for guarantees or indemnifications to cover any resulting risks to themselves;
- SHA: the shareholders agreement contains the agreements regarding the mutual relationships between shareholders. In it, the shareholders determine, for example, when someone is forced to sell their shares, how the price will be set in such a case, if it contains any voting agreements, what to do if a third party wants to purchase all the shares, etc. Depending on the distribution of the shares, the exact contents of the shareholders agreement will need to be determined along with how to best protect the interests of the various shareholders;
- Management agreement: If a shareholder also becomes director or general manager of the acquired company, then a management agreement will need to be entered into between the company the director / general manager. In such cases, it is good to determine that if the management agreement ends, this also means that this creates an obligation to offer the shares so the company and fellow shareholders are not bound to the director (who has quit or has been let go) as a shareholder;
- Deed of transfer: There will not be a formal closing for the transfer of shares until a notarial deed of transfer is signed, because Dutch law requires such a notarial transfer. The notary usually draws up the deed of transfer based on the Sale Purchase Agreement entered into between the parties and often refers to this in the deed of transfer.
There are other 'forces' in play apart from contract formation in an acquisition. Wherever there is an enterprise, there are working people. As such, it is important to always take into account the employees for mergers and acquisitions and the interests of employees during a merger or an acquisition. Based on employee participation, employees are granted their own rights during mergers and acquisitions. The entrepreneur is obliged to ask the works council for advice. Moreover, unions and the Social and Economic Council (SER) must be informed about an intended acquisition. If this does not take place, or does not take place on time, then the employees have to option to take legal action.
Mergers and acquisitions often take some time. Once entrepreneurs decide to merge or acquire a company, a lot of work will often have to be done in a small amount of time. During mergers and acquisitions, lawyers, accountants, the notary and the entrepreneurs work together to ensure that the best possible result is achieved.
The above is just a brief description of mergers and acquisitions and everything it entails. If you have any questions about mergers and acquisitions, then do not hesitate to contact one of our experts.