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Mergers and acquisition contracts are a part of business sales

On Behalf of | Aug 25, 2022 | Franchise Law |

There are thick piles of papers to wade through before franchisees buy or open a business. Covering a business’s purchase, sale or merging, mergers and acquisition agreements (M&A) are addressed early in the transaction process when examining finances, tax strategies and obligations. These contracts are usually not binding (or at least enforceable in court).

What do they cover?

An M&A agreement starts the transaction agreement process involving the purchase, sale or merger. The buyer and their attorney often draft a contract, and the two sides negotiate until they have a deal. However, a motivated seller may also prepare the agreement as a way of (to their way of thinking) carving out the negotiation’s starting point.

Fair agreements are often most effective and efficient

Those looking to streamline the transaction process generally should start with what is a fair and reasonable deal. It speeds up the process and minimizes legal fees. Some can’t help themselves or consider hardnosed point-by-point negotiation as the best way to cut a deal, but this can cause unnecessary delays, create a contentious atmosphere that can be a distraction for minimal gains, or kill the deal altogether.

Working towards a deal

Regardless of who drafts an M&A, the two sides will typically go back and forth with edits, with each side making changes. The process could stall at some point, often when attorneys fighting for their client’s best interests reach an impasse. The clients, who should be involved throughout, will then need to step in to settle the remaining sticking points. While the attorneys can advise, the client is the one who is bound by the contract and must make the final call on whether they finalize the transaction or cancel the deal.

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