Corporate growth is often achieved through mergers and acquisitions. Understanding the differences between the two strategies can be extremely helpful for making informed decisions and implementing growth strategies that work. An experienced attorney can help you navigate mergers vs. acquisitions in Tennessee.
Defining the Terms
A merger occurs when two businesses combine to form a new business. Often, companies will combine assets, resources, and operations to develop an organization that is more efficient and competitive, and they will cease to exist as independent entities.
Typically, control is shared equally between the parties, and they work together for mutual benefit. Mergers usually occur between companies of similar value and size.
An acquisition is also sometimes referred to as a takeover. In an acquisition, one company buys another and then takes over its operations. Distinct terms are used for the companies involved. The acquirer is the company doing the purchasing, and the company being purchased is the target.
Acquisitions can facilitate access to new technology, eliminate industry competition, or promote rapid growth. An acquisition can be mutually agreed upon (friendly) or occur amid opposition (hostile). Mergers and acquisitions take place to make businesses more competitive in an expanding global market. Common motivations include:
- Promote market expansion into new industries or geographic regions
- Increased innovation through the acquisition of intellectual property, new technology, or patents
- Revenue growth can be achieved through new distribution networks and customer bases
- Cost savings can be recognized by reducing operational expenses and duplication of effort
In Tennessee, mergers and acquisitions are typically handled by the Chancery Court, which handles business-related matters. Each of Tennessee’s 95 counties has its own Chancery Court. In Sumner County, the court is located at 155 E. Main Street, Room 3600, Gallatin, TN 37066.
In cases involving complexities such as cross-state mergers or antitrust concerns, the federal courts may also be involved.
Tips for Improving Morale Post Merger
In the US in 2024, there were 13,697 mergers and acquisitions, and 373 were valued at over $1 billion. The technology services sector continues to comprise the largest share of deals and the highest transaction value.
When companies merge, employees can feel anxious and stressed about what their future role will require or whether they will be let go. To retain key talent and promote a smooth transition, the following should be considered during the post-merger process to boost morale:
- Practice clear communication. Letting employees know about planned changes and timelines can help build trust and reduce employee anxiety.
- Provide resources and support. Providing employee training for new roles or systems can be beneficial, along with workshops, counseling, or other supportive services to address stress and anxiety.
- Involve employees in the transition. Provide opportunities for employees to provide input and feedback. These opportunities allow employees to feel heard and to take ownership of the changes happening.
- Acknowledge and reward contributions. A positive environment can be instrumental in keeping employees motivated. Employees can be recognized for their hard work or innovative ideas.
Hire a Mergers & Acquisitions Lawyer
Navigating the complexities of Tennessee mergers & acquisitions law requires an experienced lawyer. The team at Phillips | Ralston has been providing legal services in Sumner County since 1977. Our lawyers have a deep understanding of relevant local, state, and federal laws.
An experienced merger & acquisition lawyer will have a deep understanding of each part of the transaction process, including due diligence (identifying risks), contract drafting and review, ensuring compliance with state and federal laws, and avoiding litigation by proactively addressing disputes.
Mergers & acquisitions lawyers have a clear understanding of the steps involved in buying, selling, and merging companies. Their knowledge is critical to protect the financial interests of sellers and buyers. Phillips | Ralston can help ensure that all transactions are compliant and handled efficiently.
FAQs
What Is the Difference Between a Merger and an Acquisition?
The difference between a merger and an acquisition is that a merger combines companies, and an acquisition involves one company acquiring another. They are both handled under the umbrella of corporate law. Mergers and acquisitions are both business transactions that must comply with laws on regulatory compliance, due diligence, and contract negotiation.
Mergers and acquisitions must comply with state and federal laws enforced by the Department of Justice and the Federal Trade Commission, which govern antitrust regulations.
What Does It Mean if You Work in Mergers and Acquisitions?
Individuals who work in mergers and acquisitions are responsible for assisting with the buying, selling, and merging of companies. They also work on financial outcomes and corporate strategy.
Professionals in this field must have strong verbal and written communication skills, keen analytical skills to understand and interpret market trends and complex financial data, and project management skills. Typical employers include consulting firms, investment banks, and corporate finance departments.
Who Gets Laid Off First in a Merger?
When a company is involved in a merger, employees often experience feelings of uncertainty, wondering who will be the first to be laid off. When a new company is formed, employees from both sides often feel fear and uncertainty about their future employment. Employees may feel uncertainty about their role in the company, especially when transitioning to a new position, location, or department.
How Are Mergers Structured?
The way a merger is structured is determined by the relationship of the two companies involved in the deal. A vertical merger happens when two companies from different parts of the same industry combine. A horizontal merger brings together two similar companies that compete with each other.
A market-extension merger combines two companies that sell the same product but in different markets. Concentric mergers occur when two businesses that serve the same customer base combine.
Contact a Mergers & Acquisitions Attorney
Buying, selling, and merging companies requires complex legal knowledge. If you are considering conducting a merger or acquisition, you will want to hire a mergers and acquisitions lawyer with the skill and experience to handle the transaction. Phillips | Ralston can help avoid legal compliance issues, optimize tax benefits, and lead a smooth transition. Contact the office to discuss your business needs.
