3 Reasons Why a Proposed Merger or Acquisition May Fail

Acquiring or merging with another company can create significant business opportunities unlike any other. However, both are highly complicated, and many are unsuccessful. When faced with the possibility of merging with or acquiring another business, it’s important to consider some of the more common reasons why these arrangements sometimes fail.

Incomplete data

Reliable, complete, and accurate data is the key to any successful merger or acquisition. Financial statements, proprietary information, and contracts must all be made available for review by the entity proposing the transaction. Environmental, tax, and employee liabilities, if not fully fleshed out, can sink an otherwise promising transaction. Never close a deal if your advisors have not fully addressed each and every item on your due diligence checklist. Sellers must be meticulous in compiling and maintaining this essential data, and potential buyers must carefully vet what they are told of an opportunity through performing complete due diligence.

Logistically improbable

In some cases, joining or absorbing another company may not be logistically realistic. The cultures of the businesses may be too difficult to harmonize, and operating standards may not align. Some transactions require relocation to another state or country, presenting difficulties in understanding unfamiliar regulatory environments and eroding employee goodwill from an unpopular, imposed relocation.

It is important to not overlook these logistical or “soft” details of a proposed merger or acquisition, because they can sink a venture just as quickly as a flawed business model.

Antitrust laws

U.S. antitrust laws prohibit business combinations that would create an anticompetitive environment. To prevent anticompetitive transactions, the Federal Trade Commission and the Department of Justice must review and approve deals valued at $94 million or more. A proposed merger viewed by the government as having an anticompetitive effect may be rejected.

Thorough Documentation

Merging with or acquiring other businesses necessarily involves lots of pre-closing details and obligations, which must be expertly articulated in a set of definitive closing documents. The countless hours spent in negotiation, discussion, and analysis, and drafting of an agreement (including the toll extracted by frustration, anger, hope, and eventually exhilaration) all go by the wayside in the hands of an inexperienced scrivener hired to paper the transaction.

Knowing why mergers or acquisitions fail, and making informed decisions throughout what can be a long process, can prevent costly oversights. Contacting a lawyer at the beginning of a desired transaction can better ensure its success at the end.

To avoid an unsuccessful transaction, prioritize thorough due diligence, and seek guidance from a team of experienced attorneys at the earliest stages. Above all, invest a few dollars more per hour to hire a seasoned attorney experienced in business transactions to document what is likely the biggest deal of your life. . . . so far.

Related Articles

8 Tips to Find a Reliable UK Immigration Lawyer

8 Tips to Find a Reliable UK Immigration Lawyer It can be difficult to find a trustworthy UK immigration lawyer. These are our top tips...

Reddit Legal Advice: 3 Tips for Evaluating Online Legal Advice

Reddit Legal Advice: 3 Tips for Evaluating Online Legal Advice Although it's possible to find the exact answer to your legal questions on the internet,...

Truck Accident Lawyers

Truck accidents are one of the most devastating events that happen to people, and when you're involved in one, you need the best legal...

What is Legal Information?

What is Legal Information? Any person who is familiar with the law can give legal information. This is different from legal advice. It's simply a...

High Conflict Divorce & Family Law

High Conflict Divorce & Family Law Alberta's legal system and judicial system have made significant progress in encouraging parties and their families to choose Alternative...

Here are some tips to help you choose the best criminal defense lawyer

If you are arrested or accused of a crime, hiring a criminal federal defense lawyer is the best decision you can make. You might...

A Certified Intimacy Coach and Educator offers advice on how to get your partner to sex after divorce

A Certified Intimacy Coach and Educator offers advice on how to get your partner to sex after divorce Some people are eager to get back...

New York Personal Injury Lawyer

Personal Injury Lawyer We are here to assist you in resolving your matter Uncertainties are part of life as everyone is susceptible to an accident...

Personal Injury Lawyer LI – Get the Most Help

What Is a Personal Injury Lawyer? It is important to realize the process of making claims against an individual or an entity. These parties have...

Follow Us


California Personal Bankruptcy Regulations

California Personal Bankruptcy legislation Permit the usage of National supplemental exemption together with California...

Selecting your area of law

Law schools do not expect you to know the type of law you wish...

Ask a lawyer: Can Bankruptcy Clear Judgments in Lawsuits?

Chapter 7 bankruptcy or Chapter 13 bankruptcy can help you to eliminate or reorganize...

State or Federal Tax Laws – Which to Follow?

Federal tax laws are always a necessary evil to many. Because the United States...

What You Should Know About Getting Divorced in the Military

When a military family goes through a divorce, they will deal with unique issues...

Five of the Best Computer Cases for CAD

Custom casings are a must-have piece for any tech enthusiast. We took the time to...

Subscribe ⇘

error: Content is protected !!