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The Ultimate Guide to Mergers and Acquisitions (M&A)

Mergers and acquisitions (M&A) is an umbrella term that refers to the combination of two businesses. It gives buyers looking to achieve strategic goals an alternative to organic growth; It gives sellers an opportunity to cash out or to share ... Read More

Demystifying the Due Diligence Process in Mergers and Acquisitions

There is massive information asymmetry between the buyer and seller when acquiring a company: The seller knows everything about its own business and the buyer knows far less. Making matters worse, the seller is incentivized to hide or downplay negative aspects of ... Read More

Fairness opinion: Example and Role in M&A

In the M&A context, a fairness opinion is a document provided by the seller’s investment banker to the seller’s board of directors attesting to the fairness of a transaction from a financial point of view. The purpose of the fairness opinion is ... Read More

Microsoft-LinkedIn Timeline: An Inside Look at the Merger

M&A transactions can get complicated, with no shortage of legal, tax and accounting issues to sort out. Models are built, due diligence is performed, and fairness opinions are presented to the board. That said, getting a deal done remains a very human (and therefore ... Read More

Earnouts in M&A

An earnout, formally called a contingent consideration, is a mechanism used in M&A whereby, in addition to an upfront payment, future payments are promised to the seller upon the achievement of specific milestones (i.e. achieving specific EBITDA targets). The purpose of the earnout ... Read More

Breakup Fees and Reverse Termination Fees in M&A

A breakup fee refers to a payment a seller owes a buyer should a deal fall through due to reasons explicitly specified in the merger agreement. For example, when Microsoft acquired LinkedIn in June 13, 2016, Microsoft negotiated a $725 ... Read More

No-Shop and Go-Shop in M&A

When Microsoft acquired Linkedin on June 13, 2016, the press release disclosed that the breakup fee would take effect if LinkedIn ultimately consummates a deal with another buyer. Page 56 of the Microsoft/LinkedIn merger agreement describes in detail the limitation on LinkedIn's ability ... Read More

Material Adverse Change: The ABCs of MACs

A material adverse change (MAC) is one of several legal mechanisms used to reduce risk and uncertainty for buyers and sellers during the period between the date of the merger agreement and the date the deal closes. MACs are legal clauses that buyers include in ... Read More

Deal Documents: Where to Find Information About M&A Transactions

When analyzing M&A transactions, finding the relevant documents is often the hardest part of the job. In an acquisition of a public target, the type of publicly available documents depends on whether the deal is structured as a merger or ... Read More

Asset Sale vs Stock Sale

When one company acquires another company, what does the seller actually give the buyer? The answer depends on whether the deal is structured legally as a stock sale or as an asset sale. Broadly speaking: In a stock sale, the seller ... Read More
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