Why Deal Structure Is Critical in Mergers and Acquisitions


Most mergers and acquisitions are complex transactions that require planning, extensive collaboration, and lots of work with the participation of both companies involved. If you want to know how to sell your company, developing the structure of the deal is critical for success. There are basically three models based on which the particular transaction can be structured:

  • Stock purchases – these transactions involve one company purchasing another company’s shares from their shareholders. When this happens, the business that is being purchased might or might not continue to function as a business unit within the structure of the buyer company;
  • Asset purchase – in these deals, the buyer company does not buy another company in its entirety, purchasing only the assets or the divisions of interest. This structure is generally considered to be more favorable for buyers because it gives the buyer the opportunity to choose the assets to buy;
  • Mergers – these transactions involve two companies combining their power to form a third one. The formation of the new business unit is beneficial for both participant companies, creating a business that has access to new markets, that can have a larger share on a particular market or that can benefit from assets on one side and know-how on the other.

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