Mergers & Acquisitions from A to Z

By Andrew J. Sherman | Go to book overview
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Structuring the Deal
There is a virtually infinite number of ways in which a corporate merger or acquisition may be structured. There are probably as many potential deal structures as there are qualified and creative transactional lawyers and investment bankers. The goal is not to create the most complex structure, but rather to create a structure that fairly reflects the goals and objectives of the buyer and the seller. Naturally, not all of the objectives of each party will be met each time—there will almost always be a degree of negotiation and compromise.Virtually all structures, even the most complex, are at their roots basically either mergers or acquisitions, including the purchase or consolidation of either stock or assets. (The basic alternative structures are shown in Figure 7-1.) The creativity often comes in structuring the deal to achieve a particular tax or strategic result or to accommodate a multistep or multiparty transaction. This chapter will look at some of the typical structures as well as a few alternative types of transactions, such as spin-offs, shell mergers, and ESOPs.At the heart of each transaction are the following key issues that will affect the structure of the deal:
How will tangible and intangible assets be transferred to the purchaser from the seller?
At what price will they be transferred, and according to what terms?
What issues discovered during due diligence may affect the price, terms, or structure of the deal?


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