Mergers and Acquisitions (M&A) refers to the purchase or sale of entire companies or shares in companies. Economically similar goals can also be achieved through a merger of companies.
The purchase and sale of companies in Germany is becoming increasingly important, especially in times of international expansion of companies (globalization) and of fast-growing start-up companies:
From the buyer's point of view, the purchase serves, for example, to grow or expand the business with new products and services or in new markets or to eliminate a competitor.
From the seller's perspective, the sale serves to separate business activities, exit a founder or investor (i.e. to realize the increase in value), or solve succession problems - motives for buying and selling companies abound.
At the beginning of discussions about a potential M&A transaction, the parties usually enter into a Confidentiality Agreement (also called Non-Disclosure Agreement or in short: NDA).
If the initial discussions are successful, the parties will set out in a Letter of Intent (LOI) the key parameters of the transaction as well as the key steps of the further acquisition process. We support you in the drafting and negotiation of the documents because this is where the essential course is set for the later negotiations, an efficient process and the terms of the transaction in the final agreements.
However, essential provisions are also agreed upon to protect the interests of the parties in the event of a failure of the negotiations, which is especially crucial if the parties are competitors. Even at this stage, mistakes can jeopardize the success of an M&A transaction and lead to serious risks for the parties. Consulting an M&A laywer early in can hekp prevent those risks.
As a buyer, you should pay particular attention to the due diligence (basically an M&A deal analysis) when acquiring a company. This involves examining the target company from a tax and legal perspective, among other things, in order to determine the suitability of the target company for achieving the transaction objectives and to uncover any risks. Our experienced M&A attorneys are happy to assist you in this process to ensure the success of the transaction and to avoid unpleasant surprises.
But also the buyer should be supported by experienced lawyers during the due diligence process. It is about a professional due diligence process and the right handling of possible risks at the target company in order to avoid later liability of the seller and to ensure the appropriate protection of trade secrets.
Our M&A lawyers
- draft the purchase agreement and the ancillary agreements which may be required as part of the transaction (e.g., service agreements, lease agreements, managing director service agreements),
- review drafts of the other party and negotiate them with the aim of securing the client's interests.
Our team will also keep an eye on any consent requirements for the buyer or seller or for the transaction as a whole and similar obstacles in connection with a company acquisition in Germany.
In addition, aspects of
- civil law,
- corporate law,
- family law,
- public law, and
- anti-trust law
must be taken into account when providing advice on mergers and acquisitions law. This applies, for example, if in the case of the participation of private individuals the company to be sold represents the essential part of the assets of the seller, if permission for operating a company is linked to personal requirements or if the threshold values relevant under anti-trust laws are exceeded.
- WINHELLER advised Mesa Laboratories, Inc., based in Colorado, USA, on the acquisition of the peptide purification business of Berlin-based Belyntic GmbH. Learn more
- WINHELLER has successfully advised cybersecurity expert Kape Technologies plc at the purchase of ZenGuard GmbH in Berlin. Learn more
- WINHELLER advised Mesa Laboratories, Inc., based in Colorado, USA, on the acquisition of BAG Health Care GmbH’s Hygiene Monitoring Business in Lich, Germany. Learn more
There are essentially two options available for the acquisition of a company,, the Asset Deal on the one hand and the Share Deal on the other hand.
- In an Asset Deal, a company's assets are sold and transferred individually. It is of vital importance that the long-term contractual relationships that are important for the company are transferred to the buyer. Since the respective contractual partners must in principle consent thereto, it is not unusual that such an Asset Deal is taken as an opportunity for renegotiations.
In terms of the contract, the principle of legal certainty of property law must be observed: The assets to be sold and to be transferred must be clearly defined in the contract or in an annex. When transferring real estate, possible notarization requirements - and associated cost - must be taken into account.
- In a Share Deal, no individual assets are sold and transferred, but rather shares in a corporation or partnership. Assets remain assigned to the same legal entity, at which, however, a change of shareholders occurs. With the exception of shares of a GmbH (limited liability company), the transfer of a company's shares does not require notarization, even when the transferring company possesses real property.
Our attorneys will be delighted to share their advice on M&A transactions and whether an Asset Deal or a Share Deal is the suitable option for your transaction.
These two forms of company acquisition are characterized by special features of the parties involved. Both are conceivable in the form of an asset deal as well as a share deal.
In the case of a management buy-out (MBO), the company is acquired by its previous managers, whereas in the case of a management buy-in (MBI), the managers of an outside company seek management positions in the company to be purchased.
If several purchasers are involved in an MBO, the purchaser in practice is often an acquisition company created specifically for this purpose (a so-called Special Purpose Vehicle, SPV), which becomes the legal owner of the company to be purchased.
The reasons for the formation of such an SPV are manifold. Tax law aspects often play a role, but liability law aspects can also speak for the use of an SPV. As a rule, due diligence is not required in the case of an MBO and guarantees about the target company do not play a significant role from a contractual point of view.
Our lawyers have been advising on cross-border M&A transactions for decades, both foreign buyers and German sellers selling their businesses to foreign buyers.
We are familiar with the legal and cultural differences that have to be bridged, as well as the special formalities that have to be observed. In the case of the acquisition of German companies by EU foreigners, special reporting obligations or even approval requirements may be necessary under German foreign trade law, which is based on an EU regulation on the so-called "screening of foreign direct investments (FDI)".
Mergers of companies can be carried out in accordance with the provisions of the German Transformation Act (Umwandlungsgesetz). For example, two legal entities can be merged into a third, newly created legal entity, whereby the shareholders of the original legal entities become shareholders of the newly created legal entity.
Parts of an enterprise, such as partial operations or individual departments, can be separated by means of a spin-off and transferred to a new legal entity. The transferring legal entity or its shareholders become shareholders of the new legal entity thus created.
Conversions, mergers and spin-offs can be carried out in connection with M&A transactions but can also be a means of intra-group restructuring under corporate law, either to merge several companies or to transfer individual divisions of a company into a separate company, whether to shield business risks, to give third parties an interest in the division or to prepare for the sale of a division or the rest of the company.
Within the EU and the European Economic Area, two or more legal entities can also be merged across national borders by way of a cross-border merger.
In the course of advising you on your M&A transaction, our M&A attorneys will inform you about the various options for the acquisition or sale of a business and suggest the most suitable one for your project.
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