Mergers & Acquisitions (M&A) refers to the coming together or consolidation of different companies. Due to the rise of successful and steadily growing start-up companies, the frequency and scope of such transactions have increased. When it comes to the question of how M&A should take place, entrepreneurs have various options open to them.
Regardless of how companies merge, competent legal counsel is essential to provide support and advice. Our team of German corporate and contract law experts will be at your side throughout the process. Our firm’s full-service approach means that we can oversee the legal requirements for the contracts involved, the following restructuring of the companies and in any legal disputes which may arise.
Mergers & acquisitions is the broad term for the coming together or consolidation of companies. It can happen when two companies of roughly equal size come together in a merger or by a more substantial company acquires the other. To ensure that the management structures and model of the new company are viable, a merger requires careful preparation. It also requires the careful procurement of proper filing documents necessary to form a company.
Acquisitions are transactions between companies that differ in size. One company takes over another, and no name or internal change of the acquiring company is required. An acquisition can take place in different ways. The most appropriate form depends on the goals of the companies involved.
Compensation in the Event of Termination of Negotiations
If the parties cannot agree on a purchase price or other contract-specific aspects, negotiations may break off. In such cases, claims for damages are often asserted. If an M&A deal falls through, it must first be determined whether the negotiations were broken off pre-contractually or after the contract has been concluded.
In the case of a pre-contractual breakdown, it can often be challenging to assert claims for damages. Although a claim could be enforced under the provisions of Sections 280 (1), 311 (2), 241 (2) BGB (culpa in contrahendo, abbreviated c.i.c.), this requires a relationship of trustworthiness of protection. When such a relationship of trust exists depends on the individual case.
If a contract breach is caused by one party (such as non-payment of the agreed purchase price), compensation can be claimed from the other party. It is also possible to withdraw from the purchase contract between the companies under certain circumstances.
Our team of German contract lawyers will inform you about your legal options for action after the termination of an M&A deal or the negotiations for it and will be happy to present you with implementing them.