Strategic legal counsel during mergers and acquisitions preserves deal value and reduces exposure to liabilities that can derail transactions. Counsel helps structure deals to reflect tax planning, asset protection, and operational transition needs while drafting robust contracts that allocate risk clearly. Proactive legal planning also supports regulatory compliance, timely closings, and practical post-closing arrangements that protect the business and its stakeholders.
Comprehensive counsel identifies key contractual and regulatory risks during due diligence and designs tailored representations and indemnities to allocate those risks fairly. This approach ensures that purchase agreements contain appropriate caps, baskets, and survival periods that match the nature of potential liabilities and the parties’ bargaining power, helping to secure predictable remedies when issues arise.
Hatcher Legal approaches transactions with a focus on commercial outcomes and risk management. Our work centers on drafting clear agreements, conducting thorough due diligence, and negotiating terms that reflect client priorities. We emphasize communication and practical solutions that keep transactions moving while protecting client interests across the full lifecycle of the deal.
After closing we support claim resolution under indemnity provisions, remedy negotiations, and enforcement of post-closing covenants. Legal guidance during integration addresses contract assignments, employment transitions, and IP consolidation to maintain operational continuity and protect the business’s acquired value.
An asset purchase transfers specified assets and often only agreed-upon liabilities to the buyer, allowing the buyer to pick and choose which contracts and property to acquire. This structure can be beneficial when the buyer seeks to avoid unknown liabilities or exclude underperforming assets, and it typically requires assignment of contracts and consents where necessary. A stock purchase transfers ownership of the seller’s equity and with it the company’s liabilities and contracts as they exist. This approach can simplify the continuity of licenses and contracts, but it exposes the buyer to the entity’s historical obligations, making thorough due diligence and indemnity protections especially important to manage potential legacy liabilities.
Transaction timelines vary widely depending on complexity, due diligence scope, and required consents, often ranging from a few months for straightforward deals to many months for complex, multi-jurisdictional transactions. Early planning, prompt document production, and coordinated responses from sellers and advisors can significantly shorten the timeline and reduce closing delays. Factors that extend timelines include regulatory approvals, financing contingencies, third-party consents, and unresolved diligence issues. Clear term sheets, realistic scheduling, and proactive resolution of known risks help keep the transaction on track and provide predictable milestones for both parties.
Sellers should begin by organizing corporate records, financial statements, tax returns, key contracts, employment agreements, and intellectual property documentation. Ensuring that corporate governance documents are up to date and that regulatory filings are current reduces friction during due diligence and provides buyers with confidence in the accuracy of representations. Addressing operational issues such as unresolved litigation, compliance gaps, or unclear ownership of assets before marketing the business preserves value and strengthens negotiating positions. Early consultation with legal and financial advisors helps identify and remedy potential deal breakers and positions the business for a smoother sale process.
Due diligence uncovers liabilities, contract risks, regulatory exposures, and financial anomalies that can influence the buyer’s valuation and willingness to close at a given price. Findings often lead to adjustments in purchase price, escrow amounts, indemnity provisions, or specific carve-outs to address identified risks and protect the buyer from unexpected obligations. Buyers frequently seek price reductions or enhanced protections when due diligence reveals material issues, while sellers may offer remediation plans or adjusted representations to bridge gaps. Clear communication about the significance of findings and realistic remediation options helps negotiators reach an equitable resolution that preserves deal momentum.
Risk allocation commonly relies on representations and warranties, indemnities, insurance, escrows, and purchase price adjustments. Buyers seek broad representations and meaningful indemnities for undisclosed liabilities, while sellers aim for caps, baskets, and survival periods to limit post-closing exposure and provide finality. Negotiation balances immediate protections with acceptable long-term risk for both sides. Additional mechanisms such as escrowed funds, holdbacks, and third-party insurance transfers some risk and provide liquidity for claim resolution. The chosen approach depends on deal size, the nature of identified risks, and the parties’ relative bargaining positions, with clear language essential to enforceability.
Notification requirements vary by contract terms, employment regulations, and the strategic needs of the business. Some contracts require consent for assignment, and certain regulatory approvals may require public or governmental notification. For employees, employment agreements or collective bargaining arrangements may impose notice or consultation obligations prior to transfer of control. Strategic timing of notifications balances legal obligations with business concerns about rumors and employee retention. Counsel can advise on which parties must be informed, appropriate timing for announcements, and any legal steps required to effect assignments or obtain consents in accordance with contractual and statutory rules.
Earnouts tie a portion of the purchase price to future performance metrics, aligning incentives for sellers who remain involved with the business. Structuring earnouts requires clear definitions of metrics, measurement periods, and dispute resolution procedures to avoid post-closing disagreement. Proper drafting addresses accounting treatments, permitted adjustments, and control rights during the earnout period. Seller financing involves the buyer providing payment over time, secured by assets or receivables and often accompanied by covenants and default remedies. These arrangements require careful documentation of payment schedules, security interests, and protections against deterioration in target value, ensuring that both parties’ financial interests are balanced and enforceable.
Regulatory approvals can be central to certain transactions, particularly in regulated industries or where antitrust concerns exist. Identifying applicable regulatory bodies early in the process and understanding their timelines is essential to planning. Some approvals may be ministerial while others involve substantive review that can materially affect transaction timing and structure. Failure to obtain required approvals can delay or invalidate a transaction, so counsel regularly coordinates with regulatory specialists and prepares submissions that address statutory criteria. Contingency planning, including conditional closing arrangements or holdbacks, can mitigate timing risks associated with regulatory review.
Protecting intellectual property during a sale begins with identifying all proprietary assets, ensuring clear title, and preparing assignments or licenses that transfer rights as intended. Agreements should specify which IP is included, how it will be transferred or licensed, and any retained rights for the seller. Completing recordation steps and resolving third-party claims prior to closing reduces disputes after transfer. Counsel also addresses confidentiality and noncompete considerations that protect the buyer’s investment in acquired IP. Transitional support agreements and well-drafted representations about ownership and absence of infringement claims add layers of protection and clarify remedies if IP ownership issues arise post-closing.
If a representation is later proven false, the purchase agreement’s indemnity provisions determine available remedies, which may include monetary recovery from the seller, setoff against escrowed funds, or other contractual remedies. The agreement will typically specify claim procedures, notice requirements, limitations on recovery, and caps on liability. Timely compliance with claim protocols is essential for preserving rights. Parties often negotiate survival periods and liability caps that limit post-closing exposure and provide finality. Where material misrepresentations occur, remedies can include rescission or damages, depending on the agreement terms and the severity of the breach, making careful drafting of indemnity provisions critical to enforceable outcomes.
