It is extremely important to conduct a thorough assessment of all the factors affecting the outcome of the M&A agreement. Indeed, it will directly influence the success of the combined business.
The trend of mergers and acquisitions (M&A) over the past few years has been unceasingly gaining momentum. According to the statistics, the number of transactions increased significantly, up to 51,882 in 2017.
So, it is very important on an early stage to conduct highly competent examination of all the documentation and evaluate all the aspects that may further affect the success of the company thus merged.
Sergiy Benedysiuk, partner, head of corporate and M&A practice, pointed out the mistakes which will hinder you from drafting an effective M&A contract, provided for the “Yuridichna praktika” magazine:
Supporting M&A is a complex process that requires not only a deep technical knowledge but also a competent planning and coordination of the work of all the participants in the process. It is very important for financial, legal, tax, and other involved consultants to work as one team. In practice, this is not always the case.
Otherwise, quite often a very general document or even nothing is signed at all, which in the future won’t aid the effectiveness of the coordination of key terms and the agreement drawing up.
Regarding the legal aspects, the most common mistakes that must be taken into account when preparing M&A are:
1. Inappropriate audit of the object of acquisition
2. Insufficient processing of assurances and guarantees of the seller under the agreement
3. Errors/overstates in agreement structuring
4. The issue of currency and other regulatory restrictions
5. Failure to obtain AMCU permits for concentration
6. Failure to receiving or obtaining in the appropriate form the required corporate approvals, as well as the contract on the agreement of the spouses
7. If there are several shareholders in the business, it is important to correctly set up control mechanisms not only at the “upper” level but also to ensure their effective implementation into the corporate structure of the Ukrainian company.