Company acquisition should pay attention to what problems

Corporate Acquisition NotesMergers and acquisitions are a fast and effective way for companies to grow and develop, the reorganization of the company's mergers and acquisitions is very important, some of the better performance of the company, to mergers and acquisitions as an opportunity to quickly expand production and business activities. Before the acquisition of the company, from the legal level, there are some need to prepare for reference. First, the preparations for the acquirer and the target company or its shareholders to negotiate a preliminary understanding of the situation, and then reach an agreement on the intention of mergers and acquisitions, the signing of the letter of intent to acquire. Acquirers in order to ensure the security of mergers and acquisitions transactions, will generally commission lawyers, accountants, appraisers and other professional personnel to form a project team on the target company due diligence; and the target company in order to contribute to the success of the merger and acquisition project, generally need to provide the necessary information to the merger and acquisition of the party to disclose the company's assets, operations, finances, debts and liabilities, organizational structure, as well as labor information, etc., if encountered in bad faith mergers and acquisitions or target company If there is a malicious M&A or the target company discloses untrue information, it will cause greater legal risks to the other party. Therefore, in the pre-preparation stage of M&A, we suggest that both parties to the merger and acquisition sign an exclusive negotiation agreement on the merger and acquisition intentions, payment guarantees, commercial secrets, disclosure obligations, and breach of contract liability and other matters for the preliminary agreement (the acquirer is a listed company, it should pay special attention to the other party's confidentiality and disclosure of information in support of the obligations), so that you can avoid the merger and acquisition process of arbitrariness, but also in the event of a breakdown of the negotiations of the pre-M&A merger and acquisition of both parties to the interests of protection. The interests of both parties to the merger and acquisition. Second, due diligence (a) the scope of legal due diligence acquirer in the target company with the assistance of the target company's assets, claims, debts, liquidation, asset valuation, the target company's management structure to conduct a detailed investigation of the staff register statistics. In the due diligence stage, the attorney may conduct legal evaluation of the materials provided by the target company or the information obtained through legal means, and verify the relevant information obtained in the preparatory stage, so as to prepare for the acquirer to make the acquisition decision with sufficient information. The investigation and verification of the basic situation of the target company mainly involves the following contents (which may be appropriately increased or reduced according to the actual situation of the M&A project and in compliance with the laws and regulations): 1. The business scope of the target company and its subsidiaries. 2. Relevant documents for the establishment and change of the target company and its subsidiaries, including business registration materials and approvals from relevant competent authorities. 3, Articles of association of the target company and its subsidiaries.4. Register of shareholders of the target company and its subsidiaries and their shareholdings.5. Resolutions of the previous board of directors' and shareholders' meetings of the target company and its subsidiaries.6. Proof of identity of the legal representatives of the target company and its subsidiaries.7. Rules and regulations of the target company and its subsidiaries.8. Contracts for acquisition entered into by the target company and its subsidiaries with other persons.9. Whether the target company of acquisition has any circumstances restricting the transfer, such as the setting up of guarantees, litigation preservation, etc.10. Investigation of the relevant subsidiary documents of the target company: (ii) According to different types of acquisitions, drawing attention to considerations with different emphases are not independent of each other, and therefore, consider all aspects of the considerations together in an acquisition.1. In the case of acquisition of a part of the target enterprise's equity interest, the acquirer should pay special attention to the following The acquisition shall be made only after the fulfillment of statutory procedures to exclude the right of first refusal of other shareholders of the target enterprise. According to Article 72 of the Company Law, "A shareholder of a limited liability company who transfers equity to a person other than a shareholder shall obtain the consent of a majority of the other shareholders." "The other shareholders shall have the right of first refusal under the same conditions for the transfer of equity shares with the consent of the shareholders of the company." "If the company's articles of association provide otherwise for the transfer of equity, the provisions shall apply." If the target enterprise is a limited company, the acquirer should pay attention to require the transferor to provide other shareholders to agree to the transferor to transfer the equity held by the transferor or have performed the statutory notification procedures in writing to prove that the acquisition can be made after the fulfillment of the statutory procedures to exclude the shareholders of the right of first refusal, or else even if the acquirer and the transferor signed a transfer agreement, there may be due to the objections of other people to cause the transfer agreement can not come into effect. 2, if the acquisition of the controlling interest of the target enterprise, the acquirer should pay special attention to fully understand the target enterprise's property and debt situation. If the acquisition target is a corporate entity, itself and the burden on its property above the debt does not change due to the transfer of capital contributors, the acquirer acquired if the empty or even insolvent enterprises will face great risks. Before the implementation of the acquisition, the acquirer should pay attention to the property situation of the target enterprise, especially in terms of debt, in addition to the debt that already existed at the time of the transfer, but also must pay attention to the target enterprise whether there are contingent liabilities, such as external guarantees or the possibility of assuming joint and several liabilities in the future. In addition to inquiring and understanding through various channels, the acquirer may also require the transferor to set out all debts in the transfer agreement and require the transferor to assume the relevant debts beyond the scope of those listed.3. In the case of the acquisition of specific assets of the target enterprise, the acquirer should pay special attention to fully understand whether there are any defects in the rights of such specific assets. The existence of defects in the rights of a particular asset may result in the invalidity of the acquisition agreement, the acquirer being unable to obtain the ownership of the particular asset, the existence of obstacles to the transfer of ownership or the failure to achieve the purpose of the transaction, and so on. Therefore, the acquirer needs to pay attention to the acquisition of specific assets to be acquired whether there are rights defects, in order to protect their legitimate rights and interests in order to protect their own legitimate rights and interests, you can ask to let the transferor in the transfer agreement on the property of no rights defects to make a commitment and guarantee. 4, the acquirer should pay attention to strive for the acquisition of the letter of intent to set up for their own security provisions. In view of the acquisition activities, the acquirer invested manpower, material and financial resources is relatively large, the risk borne is also large, in order to make the acquirer to obtain legally binding protection, the acquirer should be in the acquisition of letter of intent to set up safeguard provisions, such as exclusion clauses, the provision of information and information provisions, non-disclosure provisions, locking provisions and cost-sharing provisions, etc., these provisions are mainly to prevent without the acquirer's consent, the The transferor negotiates with a third party to transfer or sell the equity or assets of the target company, and to exclude the possibility of the transferor rejecting the acquisition. (iii) From different perspectives, analyze the due diligence considerations The establishment of a company and its successive capital increases, equity transfers and other matters relate to the validity and certainty of the equity interest, therefore, when acquiring an equity interest, it is important to review the history of the target company to ensure the legitimacy of the subject matter of the acquisition. When deciding to purchase a company, it is important to pay attention to the composition and structure of the company's assets, equity allocation, asset guarantees, non-performing assets and other circumstances. First, among all assets, the specific proportion of current and fixed assets needs to be separated. In the capital contribution, the proportion of monetary contribution to all capital contribution needs to be clear, non-monetary assets whether the transfer of ownership procedures need to be clarified. Second, the need to clarify the target company's equity allocation. First of all, we must grasp the proportion of equity held by each shareholder, whether there are preferred shares and other aspects of the situation; secondly, we must examine whether there is a related relationship between the shareholders. Third, assets with security restrictions will have an impact on the company's solvency and other aspects, so it is necessary to examine the secured assets and unsecured assets separately. Fourth, focus on the company's non-performing assets, especially the depreciable degree of fixed assets, amortization of intangible assets, and assets that will be scrapped and non-recyclable need to be examined in particular. At the same time, the company's liabilities and owners' equity are also issues that should be emphasized when acquiring a company. Among the company's liabilities, it is important to distinguish between short-term and long-term debt, and between offsetting and non-offsetting debt. The structure and ratio of assets and liabilities determine the owner's equity of the company. (D) the main risks in corporate mergers and acquisitions mergers and acquisitions is a complex systematic project, it is not just a capital transaction, but also involves mergers and acquisitions of the legal and policy environment of the social background of the company's culture and many other factors, therefore, mergers and acquisitions risk is also involved in all aspects in the risk prediction, the risks in corporate mergers and acquisitions are mainly in the following categories: 1, the statement of the risk of the process of mergers and acquisitions, mergers and acquisitions of both parties to determine the target enterprise first of all, the price of the merger and acquisition, the main basis is the price of the target enterprise. In the process of mergers and acquisitions, the merger and acquisition parties must first determine the price of the target enterprise, which is mainly based on the target enterprise's annual report financial statements and other aspects of the target enterprise, but it is possible that in order to obtain more benefits, the target enterprise may intentionally conceal the information on losses, exaggerate the information on gains, and fail to fully and accurately disclose a lot of information affecting the price, which will directly affect the reasonableness of the merger and acquisition price, and thus make the post-merger and acquisition enterprises face potential risks. 2. For mergers and acquisitions, since it involves the transfer of all or part of the assets or liabilities of the target enterprise, it is necessary to appraise the assets and liabilities of the target enterprise and appraise the subject matter, but there are the problems of the accuracy of the appraisal results in the appraisal practice, as well as the problem of interference by external factors. 3. Contract risk: The target company may not be strict in the management of the contracts related to the target company or the buyer may not be able to understand the details of the contracts entered into between the target company and other people for the seller's subjective reasons, and these contracts may be subjective. The specifics of the contract entered into by the target company with others, these contracts will directly affect the buyer in the merger and acquisition of risk. 4, asset risk of mergers and acquisitions of enterprises is the subject of assets, and asset ownership has become the core of the transaction in the process of mergers and acquisitions, if too much reliance on the statement of the book information, and the number of assets assets in the law whether or not the existence of assets and assets in the production and operation process whether or not the effective but not to make a further analysis, the May make the merger and acquisition of the enterprise after the existence of a large number of non-performing assets, thus affecting the effective operation of the enterprise. 5, liability risk for mergers and acquisitions, mergers and acquisitions after the completion of the act of mergers and acquisitions, mergers and acquisitions after the enterprise has to assume the target enterprise's original debt, due to the existence of liabilities and future liabilities, the subjective operation of the space is larger, coupled with some of the debt of the future is not reflected in the company's accounts, so that the problem of these liabilities for the mergers and acquisitions is a 6, the financial risk of corporate mergers and acquisitions are often carried out through leveraged buyouts, this merger and acquisition will inevitably make the acquirer higher debt ratio, once the market changes lead to the actual results of corporate mergers and acquisitions do not achieve the expected results, the enterprise itself will fall into a financial crisis. 7, the risk of litigation in many cases, the outcome of the litigation is difficult to predict in advance, such as the seller did not fully disclose the ongoing or potential litigation and the subject of the litigation, the individual's personal information, and the company's financial situation, and the company's financial situation. If the seller does not fully disclose the ongoing or potential litigation and the individual situation of the litigant, then the result of the litigation is likely to change the amount of the target company's assets such as accounts receivable. In terms of possible litigation risks, the acquirer needs to focus on the following aspects: first, whether the target company has legally signed and valid labor contracts with its original workers, whether it has paid social insurance to its employees in full as well as on time, and whether it has paid its employees' salaries on time. Examination of these circumstances, in order to ensure that the purchase of the company will not lead to the previous employees to file a labor dispute lawsuit problems; second, clear target company shareholders do not exist between the transfer of equity and surplus distribution disputes, only in this way, to ensure that the purchase agreement signed to ensure the effective implementation of the mergers and acquisitions agreement for the proper implementation of the need for the transfer of equity agreement is legal and effective support; third, to ensure that the target company and its creditors are not legally signed and valid labor contracts, whether the full and timely payment of social insurance to employees, whether the wages are paid on time. Third, to ensure that the target company and its creditors do not have debt disputes, and even if they do, have reached a proper solution and agreement. Because the acquirer to buy the target company, the original debt of the target company will be inherited by the acquirer. Fourth, the need to examine the target company and its responsible person whether there is a criminal situation, whether there is a criminal prosecution in a sense affects the acquirer's intention to purchase. 8, customer risk one of the purposes of the merger, in order to utilize the target company's original customers to save the investment of the newly built enterprise to develop the market, so the scope of the target company's original customers and their continued retention of the possibility of the target company's expected profitability. 9, employee risk target company's original customers and their continued retention of the possibility of the target company's expected Employee risk whether the target company's surplus staff burden is too heavy on the level of proficiency of on-the-job employees to accept new technologies and whether the relationship between the merger and acquisition of employees will leave are important factors affecting the expected production technology. 10, confidentiality risk as much as possible to understand the other side and the target company's information is a major means of reducing risk, but therefore a new risk that one side to provide the information provided by the other side may be misused by the other side may cause the target company to lose the information. The information is abused by the other party may make the party in the transaction into passive, or after the failure of the transaction the buyer has almost all the target company's information, such as the formula process marketing network and other technical and commercial secrets, it will be on the target company as well as the seller to produce a fatal threat. 11, the operational risk of mergers and acquisitions of companies is the purpose of mergers and acquisitions of mergers and acquisitions hope that the merger and acquisition is completed can produce synergistic effects, but due to the future operating environment of the Variability, such as changes in the industry as a whole changes in the market changes in business management conditions changes in the international economic situation changes in emergencies, etc., these are likely to make the merger and acquisition of enterprises can not achieve the established goals of the operation, thus generating operational risk. 12, integration risk between different enterprises, there are different corporate culture differences. If, after the completion of the merger and acquisition, the merging enterprise can not be merged with the merged enterprise's corporate culture to integrate the merged enterprise into the merging enterprise's culture, then, the merging enterprise's decision-making will not be able to be effectively carried out in the merged enterprise, and will not be able to achieve synergistic effect of the merger and acquisition of enterprises and the scale of operation benefits. 13, reputation risk enterprise's goodwill is also a part of the enterprise's intangible assets, the target company's reputation in the market and to the relevant financial institutions, the target company's reputation in the market and to the relevant financial institutions. Market and the credibility of the relevant financial institutions in the degree of risk of a credibility crisis, is an important factor reflecting the profitability of the target company merger of a poor reputation of the company, often make the merger and acquisition of the party to a number of additional burdens. Third, the signing of the agreement and formalities between the acquiring parties and representatives of the target company's creditors to form a group to draft and adopt the acquisition implementation plan. Creditors and the acquired party to reach a debt restructuring agreement, agreed upon debt repayment after the acquisition. The acquirer and the acquiree enter into formal negotiations and negotiate a purchase contract. After reaching the transfer agreement, the acquirer should register the relevant changes as soon as possible. Limited company's shareholders change, should be to the administrative department of industry and commerce for change registration; real estate and other specific assets ownership changes, also need to be registered to the relevant administrative departments to obtain the right of property. In the acquisition negotiations, the acquirer should try to strive for the transfer agreement in the transfer of the transfer of the transfer of the obligations undertaken in the process of registration procedures to avoid the transfer of the transfer of the transfer of the money received after the intentional delay in the procedures for the time, or part of the hidden procedures for the documents required.