The United States of America, Antitrust Division of the Department of Justice with the Federal Trade Commission, sets the merger & acquisition guidelines and evaluates mergers that happen within the private business entities.
A merger is when two companies come together to voluntarily merge on a friendly term to share the mutual benefits from the merger formed. In acquisition, a parent company completely takes over another company and makes such company its own by operations and management.
Huge corporates and start-up ventures decide for a merger based on the following three strategies:
If a company is looking for expanding its market share, it merges with a company that has the same product, same market share, and the same customer base. This removes duplication and offers cost savings.
Walt Disney & Pixar Animation Studios in 2006.
When companies look to avoid interruptions in their production, one company merge or acquire another company that is linked to the raw material or in the chain of the production process. Both the vertical companies are involved in the production of the same outcome, but exist differently in their stages of production.
AT&T and Time Warner in 2018.
When two companies serve the same customer base, but with different products. They expand the product offerings and diversify their shared expertise all in one place to the customer.
Citicorp and Travellers Group in 1998 to become Citigroup Inc.
Two companies unrelated to the product or service offerings or to the customer base, come together. This eventually increases the customer base and creates a much wider reach for both the existing companies for all their product offerings.
Google and Alphabet in 2015.
When does the Antitrust Division sue at the court to block a merger from happening?
Merger heightens the power of monopoly and eventual increase in the prices.
The consumers will have less choice and hence the competition decreases, and, yes,it shoots the prices up again.
Job losses happen if the parent company goes ahead with an aggressive takeover and makes a certain section of the acquired company unemployed for cost-cutting.
The above three are very serious concerns thattips the country’s economical scale balance.
This is when a company willing to pursue Merger & Acquisition (M&A) should be made very certain the purpose of the intent of the merger is not definitely -monopoly or to remove competition but it is for a mutual well-being of both the companies, the consumers right towards competitive prices and opportunity to choose.
The need for elaborate Document Review to process multifaceted M&A.
M&A work plan involves anti-trust experts, specialists conducting legal and financial due diligence, ensuring compliance with intellectual property guidelines, tax related matters, and environmental concerns,and multi-judiciary foreign counsels fromvarious geographies for M&A to substantiate compliance viz-à-viz numerous different regulations.
Document Review for an M&A is neither simple nor easy. It’s a time consuming, huge, and extensive process having to vet, review, recheck, verify, and produce a wide array of support documents and analysis in support of the M&A.
Due Diligence Check.
Conducting all the required due diligence and coming up with initial drafts of all the necessary documents. It is a comprehensive document gathering effort, unlimited interviews, assessment of the business models,review of the contractual clauses and limitations, and the performance scale the M&A will bring in.
Continuous revisions and negotiations that originates from due diligence.
Process all the formalities associated with due diligence in conjunction with the DOJ, Merger Enforcement Guidelines, standardized by the Sherman Act and the FTC Act to ensure the higher probability that the ensuing M&A is successful and doesn’t encounter anyroadblocks.
Do contract closeouts, obtain signatures to ascertain the M&A ahead.
Bringing all the finishing formalities and getting all the experts to a final reassessment and checklists completion, ending up with signatures to move the M&A ahead.
At AEREN LPO, our project management team endeavors to provide a completely support-oriented workflow process in streamlining and processing your M&A initiatives.