Engaging legal counsel for M&A preserves transaction momentum, ensures enforceable agreements, and secures accurate representations and warranties. Professional review of purchase agreements, due diligence findings, and closing documents reduces post-closing disputes and improves outcomes for owners, investors, and lending partners alike.
Careful drafting of representations, warranties, indemnities, and escrow terms gives parties defined standards and timeframes for addressing breaches, which reduces uncertainty and encourages negotiated settlements rather than protracted litigation when issues arise after closing.
Hatcher Legal offers transactional knowledge across corporate formation, shareholder agreements, and business succession planning. We help craft purchase agreements and closing documents that reflect client priorities and the realities of local markets to protect value and reduce post-closing exposure.
After closing, legal support may include managing indemnity claims, overseeing escrow releases, and advising on employment transitions and customer communications to maintain operations and resolve any disagreements without hindering business continuity.
Begin by organizing financial statements, tax returns, corporate records, and material contracts, and identify any outstanding liabilities or consents needed. Early organization improves valuation and reduces delays during buyer due diligence, making the business more attractive to interested parties. Engage advisors to review key issues and recommend corrective steps that clarify title and contract assignability. Preparing clear documentation and addressing foreseeable risks streamlines negotiations and increases the likelihood of a successful closing.
Timelines vary based on deal complexity; a straightforward asset sale between familiar parties may close in a few weeks, while financed transactions or deals requiring multiple consents and regulatory approvals often take several months. Key factors include speed of due diligence, readiness of documentation, lender requirements, and time to obtain third-party consents. Planning realistic timelines and early counsel involvement helps identify potential bottlenecks and keeps the transaction progressing toward a reliable closing date.
Buyers typically request financial statements, tax returns, corporate formation documents, material contracts, leases, employment agreements, and records of past or pending litigation. Providing organized access to these documents expedites review and reduces questions that can slow negotiations. Counsel can prepare a diligence checklist, advise on sensitive disclosures, and help manage a secure data room to protect confidential information while facilitating buyer review.
In asset sales, buyers purchase specific assets and assume agreed liabilities, often resulting in different tax and liability outcomes than equity purchases, where ownership interests change hands and many liabilities remain with the entity. Pricing can include cash at closing, deferred payments, earn-outs, and escrowed funds to secure indemnity claims. The chosen structure should reflect tax consequences, liability allocation, and the parties’ bargaining positions.
Sellers reduce post-closing liability with carefully negotiated limitations on representations and warranties, such as caps, survival periods, and baskets. Escrow arrangements and indemnity thresholds can limit immediate exposure, and carve-outs for known liabilities can be documented in schedules. Clear, candid disclosures during diligence also reduce the scope for later claims by addressing potential issues upfront and setting realistic expectations for both parties.
Escrow and holdback arrangements retain a portion of purchase proceeds for a defined period to satisfy indemnity claims or unresolved liabilities. Funds are typically released according to a timetable or after resolution of claims, and the purchase agreement specifies procedures for making and contesting claims. These mechanisms provide buyers with recourse while allowing sellers to receive most proceeds at closing, balancing interests and encouraging deal completion.
Some transactions require regulatory approvals, industry-specific consents, or third-party contract assignments, especially for regulated industries, licensed operations, or contracts with non-assignment clauses. Counsel reviews agreements and permits early to identify necessary consents and timelines, enabling parties to seek approvals in parallel with diligence and negotiation to avoid surprises that could delay or derail closing.
Employee matters are addressed through review of employment agreements, benefit plans, and wage compliance. Buyers may offer new employment terms or assume existing obligations, and some contracts require consent for assignment. Counsel works with HR and tax advisors to align transition plans, advise on retention incentives, and ensure compliance with employment laws to minimize disruption and preserve key staff after closing.
Tax considerations often determine whether an asset sale or equity sale is preferable. Asset sales may allow buyers to step up tax basis in assets, while equity sales can offer sellers more favorable capital gains treatment. Counsel coordinates with tax advisors to evaluate net proceeds and after-tax consequences, helping clients choose structures that meet financial and succession objectives while minimizing unexpected tax burdens.
Maintain confidentiality with nondisclosure agreements, controlled data rooms, and staged disclosure of sensitive information to only serious buyers. Limit identifying details in initial marketing materials and require prospective buyers to sign NDAs before receiving full access. Counsel can draft robust confidentiality terms and manage information flow to protect customer relationships and preserve negotiating leverage during the sale process.
