Merger – (n.) When two or more companies merge together to form one or a new entity.
Acquisition – (n.) When one company purchases another, either in whole or in part, either through purchasing stock or ownership interests, assets, or both.
Security – (n.) A legal instrument that secures the obligation or pledges to pay a debt with collateral.
These terms sound important, probably even intimidating. But if you have ever borrowed money from a bank, more than likely you have participated in the making of a security. If you have ever put money into a small business, you have technically participated in an acquisition – you likely acquired the membership interests of that company in exchange for a share of profits. These terms are not necessarily as impenetrable as they may seem.
This is one of the areas where small businesses are woefully under-lawyered. Mergers, acquisitions, and securities lawyers typically demand the highest transactional fees in the legal marketplace. All of them are also working for large firms that usually require a hefty minimum retainer. At the same time, the laws governing mergers, acquisitions, and securities in and around Memphis, Tennessee, are notoriously complex and opaque; and the headlines constantly warn of the dangers of running afoul of the wrong agencies, whether the IRS, the SEC, the Secretary of State, or otherwise.
But small businesses can’t operate without participating in these kinds of transactions routinely. So what is a small business to do? The worst choice is to try and do-it-yourself. While most entrepreneurs and small business owners are quick studies and masters of many trades, this is not the trade to try and master on your own. We have seen the negative consequences of this approach far too often.
An insufficient legal document at this stage can bring your entire company down, dragging all of the partners down with it. You would be much better off swallowing the fees the big law firms require than expose yourself to that risk.
But the best option would be to have a small business attorney, who works with you and your team to draft, review, revise, and negotiate these agreements from one transaction to another - when you are bringing on new partners, raising money, buying a partner out, etc. Our firm is capable of handling most of what a small business requires and usually at a smaller fee. And if we can’t handle, we are more than happy to help you find a firm you can trust to handle the jobs we are not suited for.
If you’re looking to invest in, purchase, acquire, restructure, loan money to, borrow from, or engage in any kind of corporate transaction with a small business, our firm can help. Contact our office in Memphis, Tennessee to get started.