The M&A Team Advantage

To say that the purchase or sale of an operating business is a fully involved process is an understatement. The potential purchaser juggles the need to diligence the target business, structure the transaction, obtain financing or raise capital as well as maintain their existing business obligations. The potential vendor is often knee deep with managing diligence requests from the purchaser (and their bank / the accountants who are performing a quality of earnings analysis) and addressing final pre-sale tax matters, all the while trying to operate the business as a going concern. This is not to mention working through the breadth of legal documentation involved to implement the M&A transaction itself.

Having a strong legal team that focuses on M&A transactions is essential (https://open.spotify.com/episode/2LKUE9a33zP5vixfybMypD?si=K75OevURSSu1Z7M2g38uzw), but that team extends further than the M&A lawyers themselves. Working with a team that can provide a full range of services (or who also can integrate well with specialized legal counsel where required or existing advisors, such as chartered business valuators and accountants) can help ensure that a transaction remains on track and closes smoothly. Below are a few examples of how in our experience at KMB that integration plays out over the course of an M&A transaction:

1. Employment – All M&A transactions have an element of employment law to address. Be it preparing new or revised offers of employment, ensuring that offers of employment are being made on the same or substantially similar terms as employees currently enjoy, termination matters or addressing labour items, lawyers who focus only on these areas can help to provide tailored advice and solutions to manage the transition process effectively.
2. Intellectual Property – Intellectual property matters often arise during transactions. Be it ensuring that moral rights are appropriately with the target business, conducting Canadian, US or initial intellectual property title searches to ensure that the target business inventories and retains its assets or ensuring that sufficient licensing is addressed, strong intellectual property lawyers can help address these items early to ensure a smooth closing process.
3. Pre-Closing Reorganization – Often vendors undertake a pre-closing reorganization of their corporate structure to ensure optimal tax treatment of sale proceeds. Lawyers that are able to quickly maneuver to review, advise and implement such structures, working closely with the client’s advisors, can ensure that closing is kept well on track.
4. Real Estate / Leasing / Secured Lending – Often real property is involved as part of a transaction either as an asset of the target business or a leasehold from which the target business operates. Real estate counsel can help ensure that those interests are protected to ensure business continuity post-closing, by transferring title to real property not being retained post-closing, negotiating with landlords, drafting leases for a lease back of property by the purchaser from the vendor post-closing as well as addressing lending requirements, be it on behalf of the purchaser with their secured acquisition financing or addressing bank subordination requirements on behalf of the vendor, in a specialized way that helps to keep closing expectations aligned.

The examples above are but a few of the ways that our M&A team integrates well with the full team at the firm to ensure that the transaction is well managed. The M&A lawyer is similar to a quarterback on a transaction – addressing the key legal steps and materials required to effect the acquisition or sale of a business – while involving such specialists as required to get the transaction closed for you, the client. If you have any questions regarding this or any aspect of your business, please do not hesitate to get in touch with me at 905.276.0431 or kfernandes@kmblaw.com. We are here to help.