In merging two distinct companies there are many legal technicalities that need to be reviewed to finalize the deal, so it’s critical to hire an attorney to help cover your bases. Lawyers typically assist in drafting legal documents like the letter of intent and acquisition agreement, and even employment agreements to keep key employees at […]

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While it’s an important milestone, a signed letter of intent does not guarantee a successful acquisition. Just ask Pfizer who withdrew its $150 billion bid to acquire Allergan after signing a LOI. Pfizer ended up paying a breakup fee of $150 million. After the LOI is signed, you still have a few major steps to take before the acquisition […]

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After signing a letter of intent, you expect the deal to close, but there are a number of reasons acquisitions fail ranging from regulatory hurdles to unexpected challenges that arise during due diligence to cultural clashes. In my last post, I discussed reasons deals fall apart even after both parties sign a LOI. Here are […]

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Remember that just because a deal is announced, it doesn’t mean it will go through. A record number of M&A transactions announced in 2015 have been cancelled bringing the total deal value down from $4.374 trillion to $78 billion. Unfortunately cancelled deals mean a lot of time, resources and effort were wasted putting together these […]

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Do you know who will read your letter of intent? Many assume that only the owner of the company you wish to purchase will read the LOI, but often there’s a wider audience. While the owner is your top priority, there are other likely readers of the LOI you need to consider: the board of […]

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There are many tools available to help move a transaction forward, ranging from a simple handshake agreement to a formal purchase agreement with contingencies. We have found one of the most useful tools for moving the M&A process along is the nonbinding letter of intent. To further understand the advantages of the nonbinding LOI, we’ve outlined […]

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The Letter of Intent (LOI) is far more than a legal document. It’s a key milestone in the M&A process and can be a powerful tool for getting the deal done. The LOI provides an opportunity to solidify your relationship with the seller and brings about a new level of commitment and resolve to getting the […]

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The Letter of Intent (LOI) is an important milestone on the M&A process and is used to crystallize the most important terms of the deal. While the LOI is an important legal document, it also brings a new level of commitment and resolve to the deal. The LOI can be “narrow” or “comprehensive.” Narrow LOI […]

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I’m frequently asked about the “right” price to put in the letter of intent. As you will know, the LOI is an important milestone in the M&A process, because it establishes a “gentleman’s agreement” before the formal deal is settled.  You have yet to compete due diligence at this stage, and figuring out the right […]

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Too many attempted acquisitions collapse before they are consummated. Don’t let this happen to you! Join our webinar and equip yourself to close the deal. Did you know that $390 billion worth of deals have been withdrawn in 2014? After months of preparation these acquisitions fell apart, post letter of intent. Rather than scare you […]

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Although buyers usually prefer not to include price for fear of ramifications later, most sellers want to see a price mentioned in the LOI. If this is the case, I recommend inclusion. The key is to establish a narrow price range. If you believe the business is worth $35 million, then the LOI should propose […]

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In last week’s webinar “Contemporary Legal Issues in M&A” I received the following question about choosing the correct deal structure. Q: “What if you don’t know what kind of deal structure you want?” There are three main deal structures: stock purchase, asset purchase and merger. Each has their own advantages and disadvantages. Typically sellers prefer […]

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Do you have questions about the legal aspects of M&A? Ensure you’re prepared when it comes to the legal aspects of the deal. Join me for Contemporary Legal Issues in M&A next Thursday, October 17. This webinar will cover: The typical timeline for the M&A process Principles and purpose of a Letter of Intent and Term […]

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I typically advise my clients to have a binding no-shop in the Letter of Intent. This will ensure that the seller cannot try to find a better deal somewhere else, once the LOI is signed. Sellers may insist on including a go-shop clause, which provides a certain period of time (usually around 50 days) to […]

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by John Dearing, Capstone Managing Director I recently read an article that listed some standard items, such as type of transaction, employment, transaction contingencies and conditions, to include in a LOI. While I don’t disagree with this “standard” list, I would prefer that the LOI address the strategic intent of the two parties. The LOI […]

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About 70% of completed acquisitions fail, and even more attempts at M&A fail to reach a deal. Part of the challenge is the mix of buyers and sellers who envision dissimilar outcomes. In the pursuit of a deal the two sides have different goals and different perspectives. As in a house sale, buyer and seller […]

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The Letter of Intent is more than a document in the acquisition process—it’s a milestone. The LOI serves as an important legal document, but it also brings a new level of commitment and resolve to the deal. I would caution against leaving the LOI to the “experts”. Although you are deep into the acquisition process […]

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Join me for a webinar this Wednesday, November 28, on one of the most challenging, yet exciting parts of any deal: the journey from LOI to Close. In this webinar you will learn how to: 1. Explain the structure of an LOI and how to make it beneficial to your situation 2. Describe how to mange the […]

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Two separate clients asked me for a Letter of Intent (LOI) sample within 48 hours.  Other typical questions include:  “What should an LOI contain (or not include)?” and “Why use an Memorandum of Understanding or a Term Sheet versus an LOI?” Capstone looks at an LOI (and all of its derivatives) as a “marketing” document.  […]

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M&A: From LOI to Close CPE Credit Awarded Thursday, March 11, 2010; 1:00 PM ET David Braun is hosting a webinar with Capstone Senior Vice President Wes Teague. Building on the success of our last webinar on Contemporary Legal Issues in M&A, Capstone is presenting a new program that will lead you through one of […]

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