September 2022
By: David J. Elkanich and Amber Bevacqua-Lynott
“There is no “typical” or common merger and acquisition (M & A) transaction. Although they have some common processes and typical components, each M & A transaction—and its participants—is unique and potentially challenging for the lawyers involved. With so much at stake in most M & A transactions, attorneys may feel pressure to act in ways that may be contrary to their ethical obligations, their client’s interests, or both. It may be difficult
to determine to whom you are answerable, as well as to understand any obligations to the participants, the companies, and the deal. Moreover, lawyers may find themselves caught in the quagmire of self-preservation if a
securities deal goes sideways.
The scenario
ABC, Inc., is looking to buy and merge with its competitor, XYZ, Inc. ABC has dozens of shareholders, but XYZ has only six. You represent XYZ, and have been taking direction from its CEO and majority shareholder. The terms of the deal include both cash and stock options for XYZ’s shareholders, and most—but not all—are looking to convert at least a portion of their XYZ shares to ABC shares in the transaction. In addition, ABC has offered XYZ’s CEO a lucrative employment deal with ABC after the merger is completed. None of the other XYZ shareholders are being offered employment, but are being asked to sign five-year noncompete agreements.”
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