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Practice Definitions  | Mergers & Acquisitions

Mergers & Acquisitions

Mergers and Acquisitions embody the area of law that involves the acquisition of or merging of a corporation of one or more others and/or any of various methods of combining two or more organizations.

Merger and acquisitions are mainly governed by federal law and reviewed by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) before being consummated. Section 7 of the Clayton Act grants these government agencies the legal authority to review mergers, set the rules on how the parties report their transactions to the government and how the transactions are evaluated. Section 7 of the Act prohibits mergers and acquisitions that may substantially lessen competition or potentially create a monopoly.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) grants the DOJ and FTC the authority to evaluate the reporting of the mergers and acquisitions. Under the HSR Act the merging parties cannot acquire voting securities or assets without first filing a Pre-merger Notification and Report Form (typically, if the transaction meets specific size-of-person and size-of-transaction tests), and they have to wait until the appropriate waiting period expires (30 days - 15 days for cash tender offers). The HSR Act also has rules on how the parties report the transactions under the framework of the Horizontal Merger Guidelines, which provides rules on how mergers are evaluated for potential anticompetitive effect, product market, geographic market, market concentration, entry analysis and other factors.

The government could possibly grant an early termination before the end of the 30 day waiting period for consummation of the merger if it is determined that the transaction poses no threat to competition, only if the proper requests are submitted by the merging parties. If the transaction appears to pose a threat to competition, the DOJ and FTC may issue an additional request for information which extends the waiting period another 20 days (10 days for cash tender offer) after the parties (the acquiring party for cash tender offers) have substantially complied with the Second Request.

This is only a brief outline of the process of mergers and acquisitions. There are many legal ramifications involved, so if you are considering a merge or acquisition it is in your best interest to seek the advice of an attorney that specializes in this field. Use the search form on this page to find the right lawyer for your needs.
Should I hire a lawyer?
Yes, if you are considering a merge or acquisition, you should retain a lawyer. There are many complication legal implications involved with mergers and acquisitions right from the very start. A merge or acquisition shouldn't even be considered until all parties involved retain attorneys who specialize in mergers and acquisitions so that the process can be completed with as few legal complications as possible. Use the State Lawyers Directory to find a mergers and acquisitions lawyer that is right for your needs and legal situation.
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