Sound legal guidance in mergers and acquisitions helps prevent common pitfalls like unclear representations, unaddressed liabilities, and poorly drafted transitional provisions. Properly structured agreements allocate risk, secure payment terms, and preserve tax advantages, supporting smoother closings and helping clients achieve their commercial objectives with predictable outcomes and enforceable remedies.
Thorough due diligence and customized contract provisions allocate risks where they belong, establish clear remedies, and set realistic expectations for future claims, resulting in reduced litigation exposure and greater certainty about financial outcomes and responsibilities after the deal closes.
Hatcher Legal focuses on practical solutions that help clients achieve transaction goals while minimizing legal exposure. The firm combines corporate transaction knowledge with an understanding of tax and succession implications to create balanced agreements and support efficient closings tailored to client priorities.
After closing we support integration planning, address operational issues, manage escrow disbursements, and handle indemnity claims through negotiation or dispute resolution mechanisms to protect client interests and maintain business continuity under new ownership.
An asset sale transfers specific business assets and chosen liabilities to the buyer while leaving the selling entity intact, which can allow buyers to avoid certain unknown liabilities but may require third-party consents for contract assignments and create tax consequences for the seller. Asset sales are often preferred when buyers want to pick and choose what they acquire. A stock sale transfers ownership of the company entity itself, including all assets and liabilities, which can simplify transfer of contracts and permits but exposes the buyer to historical obligations. Sellers often prefer stock sales for tax efficiency and finality, while buyers seek representations and indemnities to address pre-closing liabilities and protect their investment.
Timing varies with transaction complexity, diligence scope, financing needs, and regulatory approvals. Smaller, well-documented asset sales can close in a few weeks, while more complex acquisitions involving multiple jurisdictions, lenders, or regulatory clearances often take several months to finalize. Clear timelines depend on prompt document production and negotiation efficiency. Early planning and proactive preparation of financials, contracts, and corporate records significantly reduce delays. Engaging legal, tax, and financial advisors at the outset enables coordinated schedules, quicker due diligence responses, and more efficient negotiations, improving the likelihood of a predictable closing date.
Legal due diligence should focus on contracts, corporate formation documents, material agreements with customers and suppliers, employment obligations, pending litigation, regulatory compliance, and intellectual property ownership. Reviewing these areas highlights potential liabilities, required consents, and contingencies that affect valuation and indemnity negotiations. Documenting findings with a risk register helps prioritize negotiation topics and informs purchase price adjustments or escrow requirements. Early identification of transfer restrictions, environmental concerns, or unresolved claims allows parties to structure protections that address the most significant risks before signing definitive agreements.
Representations and warranties are negotiated to allocate risk by specifying factual statements about the business and what happens if those statements are untrue. Parties negotiate scope, caps on liability, baskets or thresholds for claims, survival periods, and carve-outs for disclosed items to balance buyer protection with seller finality. Limiting provisions like liability caps and survival periods reduce long-term exposure for sellers while negotiated disclosure schedules and defined knowledge qualifiers can narrow the scope of representations. Tailoring these terms to the deal’s risk profile provides a workable allocation that both parties can accept.
Escrow serves as a security mechanism by holding a portion of the purchase price to satisfy indemnity claims that arise after closing. The escrow amount, release schedule, and dispute resolution process are negotiated according to identified risks and expected exposure, helping buyers recover losses while giving sellers access to most proceeds at closing. Escrow terms define claim submission procedures, time limits, and distributions. Parties often agree on tiers where a lower amount is available for smaller claims and a longer tail period protects against latent liabilities, creating predictable processes for resolving post-closing disputes.
Tax issues influence whether a transaction is structured as an asset or stock sale, impacting both buyer and seller. Asset sales can create step-up in asset basis for buyers but may trigger taxable gains for sellers, while stock sales can defer tax consequences for sellers but carry the entity’s tax attributes for buyers. Consulting with tax advisors early allows deal structuring that optimizes after-tax proceeds and anticipates state and federal tax consequences. Considerations include allocation of purchase price among asset classes, potential tax elections, and implications for seller financing or earn-outs.
Protect confidential information with nondisclosure agreements that define permitted uses, data handling requirements, and remedies for breaches. Limit distribution by using virtual data rooms, redactions, and staged disclosures tied to diligence progress so sensitive details are shared only with qualified parties under binding confidentiality terms. Also implement internal protocols for document control and require acknowledgment from advisors and potential buyers about confidentiality obligations. Effective confidentiality measures preserve negotiation leverage and reduce the risk of sensitive information harming the business if a deal does not proceed.
Non-compete and transition agreements help protect the value of the acquired business by restricting the seller’s ability to compete locally for a defined period and ensuring cooperation during a handover. Transition agreements outline seller obligations for training, customer introductions, and information transfers to support continuity after closing. These provisions must be reasonable in scope, geography, and duration to be enforceable. Tailored covenants tied to the business’s legitimate interests preserve goodwill and customer relationships while allowing the purchaser time to integrate operations and retain key personnel.
Preparing a business for sale includes organizing financial records, resolving outstanding disputes, clarifying ownership and intellectual property rights, and improving contract stability to present a reliable picture to buyers. Enhancing recurring revenue, documenting processes, and addressing contingent liabilities typically improve perceived value and speed negotiations. Early planning for tax implications and succession considerations, as well as a professional presentation of financials and operations, reduces diligence objections and supports stronger offers. Working with advisors to address gaps can materially enhance buyer confidence and overall valuation outcomes.
Post-closing disputes often involve indemnity claims, purchase price adjustments, or escrow disagreements. Well-drafted agreements specify notice procedures, dispute resolution mechanisms such as mediation or arbitration, and applicable limitations on remedies to resolve such matters efficiently and minimize business disruption. Promptly following contractual claim procedures and engaging in negotiated resolution steps often leads to faster settlements. When litigation is necessary, the agreement’s defined remedies and limitations guide the process, but proactive claim handling and clear evidence from diligence and disclosure schedules are essential to favorable outcomes.
