MERGERS AND ACQUISITIONS FOR PAYMENT PROCESSORS
Here at Global Legal, we provide legal services to clients in a wide range of industries including representing ISO, processors, agents, credit card brands, and more. Our practice areas include complex business litigation, electronic payments and financial services, corporate planning, and commercial collections, just to name a few.
One of our greatest services is mergers and acquisitions review. The transfer or consolidation of ownership and assets between companies is a complex transaction for both parties, and a mergers and acquisitions attorney from our law firm can make the process go more smoothly and make sure you’re covered on tax practices or any legal issues that may arise.
Naturally, if you’re the seller of a business or intellectual property, you want to ensure you receive payments without hassle from the buyer. A mergers and acquisition lawyer can help you with negotiation and ensure you’re treated fairly. Here are some of the main ways our legal team can help.
Preparing to Sell Your Payment Processing Company
Getting Documents Together
One of the most basic things a buyer will expect is for you to have all of your corporate documents in order. Proper documentation is paramount for any business transaction, and M&A matters are much more complex deals than your average. Every business owner should keep their books in order to track profits, losses, employee and customer information, and to avoid tax issues. These are some of the most important steps to take.
Prepare all-important contracts.
If you don’t have your contracts together before starting an M&A transaction, then the deal is over before it even begins. An M&A attorney can help make sure you have your bases covered, but in general, you should bring any legal documents that detail how you bring in revenue. Here are some examples.
Office leases: If your business operates using office buildings or any other commercial properties, then you’ll need to bring your commercial lease agreements. The acquirer will also be taking these over after the M&A deal is done.
Processor/bank contracts: These are agreements you have with your bankers or payment processors. They cover what kinds of payments you receive and what sorts of processing fees you pay. They may also detail agreements you’ve made with lenders.
Agent and referral partner agreements: These are any payment or other agreements you may have with private companies or outside counsel, like acquisition agencies, that helped facilitate your deal in the early stages.
Equipment supplier agreements: These are the contracts between your business and any vendors who supply you. The purchaser may seek to continue these deals or look for new ones.
Revenue producing contracts: If you have any sources of revenue outside of normal business operations (cash advances, check services, etc.), you’ll need to include these contracts as well.
Employment agreements: Since the buyer will also be taking over your employees, they’ll need to see all agreements regarding payroll and employee benefits in order to completely prepare for any accounting issues.
These are the most important documents to prepare before any purchase agreement. A buyer naturally needs to be able to dissect your corporate finance records to determine your profitability, cash flow, private equity, and to see what else you may control, such as stock purchases or stock sales. All these need to be considered before determining a purchase price.
Letter of Intent
This is the document the seller receives from the buyer that goes over the deal structure for the acquisition process. It generally goes over the asset purchases and the price, any liabilities involved in the acquisition transaction, and any exclusivity provisions or confidentiality agreements. An M&A attorney and financial advisors can look over this letter to determine if it’s legally sound and a good deal.
This is a process that can be started at any time by the purchaser, and it basically describes their efforts to gather important information about the seller. Of course, the seller needs to know about the buyer as well, so due diligence investigations are important steps for both parties, and M&A attorneys can help either.
In many cases, both parties in an M&A already have familiarity, so due diligence may not take a lot of time. In cases where the companies don’t have extensive experience with each other, the seller may not be willing to provide much of their information during the diligence process until they receive a letter of intent from the counterparty. Likewise, a strategic buyer may not want to provide their information until they believe they’ll be offered a fair purchase price. This is why intermediaries, such as attorneys, can be beneficial during the due diligence process.
This is the final step in the M&A process. It’s the definitive document that will legally bind both parties, whether it’s an asset purchase agreement or a share purchase agreement.
A share sale is a buyout where boards of directors sell their ownership equity in the company, often through private equity funds, to the new owner. In an asset purchase agreement, the buyer purchases specific assets from the target company, such as product lines. In these cases, the acquired company must submit to changes in corporate governance regarding the assets sold in the buyout. Asset acquisitions are often more complicated than share purchases, and an acquisition lawyer should always be consulted before finalizing.
Regardless of the type of transaction, signing this document represents the closing of the deal. The companies either merge their common interests, or one is acquired into a single new entity. Always have your M&A lawyer review all aspects of a deal before completing this step.
What if you have a business partner?
For those companies that operate under partnerships, M&A can have even more complex issues. These companies may have buy/sell provisions, which are a common corporate practice when each partner owns half the business through either a corporation or an LLC. This creates unique challenges where both members of the deal team have to agree to the merger and acquisition.
Most commonly, a buy/sell provision will stipulate a shareholders agreement where one shareholder can’t make stock deals or otherwise sell their equity without the consent of all shareholders. Details of a buy/sell provision will be provided in the initial documents for an M&A, so both parties can properly consider deal terms.
Industry driven, relationship-focused.
Our San Diego based law firm helps organizations all across the United States, and our attorneys can assist you with your joint ventures every step of the way. Don’t risk taking on such a complicated project when our legal specialists with years of experience in mergers and acquisitions can make sure you get the legal representation you need. Contact us for a consultation if you need help with your business combination.
Disclaimer: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt of viewing does not constitute an attorney-client relationship. Prior results do not guarantee a similar outcome.