Private Mergers & Acquisitions
Private companies operate under different legal terms than public companies do, and when considering acquiring a private company, it’s important that those terms are taken into account for a smooth transition. The majority of private companies have a small number of stockholders, which means that stock acquisitions are usually a simpler alternative, but private mergers are occasionally used, instead. In these cases, the merger structure is used when a public company is the target company. The three most common types of mergers are forward mergers, forward triangular mergers, and reverse triangular mergers. Learn more about these mergers and how The Chawla Law Firm can help you with your Houston private mergers.
In a forward merger situation, the target company will merge with and into the buyer, becoming one part of a new whole company. As this happens, the buyer will assume all of the target company’s assets, rights, and liabilities, ensuring that the new, larger entity has complete control over all relevant parts of the business. Finally, the target company ceases to exist as a separate entity as it is absorbed into the buyer.
Forward Triangular Mergers
A private merger that is structured as a forward triangular merger will be slightly different than a forward merger. In this situation, the buyer creates or uses a merger subsidiary to acquire the target company. The target company will merge with and into the subsidiary, ceasing to exist as a separate entity. The merger subsidiary will assume all of the target company’s assets, rights, and liabilities.
Reverse Triangular Mergers
Finally, a reverse triangular merger structure is different in that the target company survives the merger as an entity. In this situation, the buyer’s merger subsidiary merges with and into the target company, which allows the target company to assume all of the assets, rights, and liabilities of the subsidiary. The merger subsidiary will cease to exist as a separate entity and the target company will then become the buyer’s subsidiary.
Let Us Handle the Details
Houston private mergers can be time-consuming and distracting to handle on your own, but hiring a law firm to handle the legal details will help you ensure that you’re focusing on running your business smoothly and successfully. Our team is here to help you find the most suitable approach while guiding you through the process.