MERGERS & ACQUISITIONS: WHAT YOU NEED TO KNOW
The success of a merger or acquisition depends on a structured and rigorous process.
Whether it’s a vertical integration, a horizontal merger, or a strategic transaction between complementary businesses, each phase is critical. Here are the key steps in an M&A transaction, from the initial strategy to post-closing integration
STEP #1 — STRATEGIC PLANNING AND OBJECTIVE SETTING
Before initiating any action, it is essential to define the economic, legal, and operational goals of the transaction:
- Why pursue this acquisition or merger?
- What synergies are expected?
- What risks need to be anticipated?
This strategic phase provides a framework and helps identify suitable partners or target companies.
STEP #2 — SIGNING A LETTER OF INTENT (LOI)
The letter of intent formalizes the parties’ mutual interest in negotiating, without yet committing to the deal. It outlines:
- the main terms of the transaction (estimated price, scope, etc.);
- the conditions precedent (due diligence, exclusivity, etc.);
- an indicative timeline.
Although non-binding (except for specific clauses), it lays the foundation for serious negotiations.
STEP #3 — LEGAL DUE DILIGENCE
Due diligence is a crucial phase. It consists of a full legal, tax, financial, and HR audit of the target company to identify potential risks.
It generally covers:
- ongoing contracts;
- employment and HR matters;
- pending or potential litigation;
- tax and environmental liabilities.
This analysis may have a direct impact on key elements such as price adjustments and the warranties required by the buyer.
STEP #4 — DRAFTING AND NEGOTIATING AGREEMENTS
Once due diligence is complete, l’avocat M&A the M&A lawyer drafts the final documents, including:
- the share purchase agreement (SPA);
- the shareholders’ agreement, if parties remain associated;
- representations and warranties to cover identified risks.
This is a strategic phase that shapes the legal framework of the deal.
STEP #5 — OBTAINING REGULATORY APPROVALS
Depending on the nature of the transaction, regulatory bodies may need to be consulted. For example:
- notification to the French Competition Authority (if thresholds are met);
- approval from the European Commission for cross-border deals;
- information and consultation of employee representatives.
Failure to comply with these obligations may result in the nullity of the transaction or even penalties.
STEP #6 — CLOSING: THE LEGAL FINALIZATION OF THE M&A DEAL
Closing is the legal act that formalizes the completion of the deal. At this stage:
- shares or assets are transferred;
- the purchase price is paid;
- final legal documents are signed.
All parties and their advisors are typically involved in the closing.
STEP #7 — POST-CLOSING INTEGRATION AND MONITORING
After the transaction, the integration phase begins:
- aligning legal and tax structures;
- managing internal and external communications;
- monitoring performance of contractual commitments;
- enforcing non-compete clauses, earn-out provisions, etc.
The M&A lawyer's role does not stop at closing: they continue to support their client through post-deal reorganization and integration efforts.
M&A transactions are complex operations that require careful preparation at every step to ensure legal security and maximize value. Planning to carry out such a transaction? Contact The Line.
