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Merger Agreement Drafting: Key Terms, Drafting Tips, Legal Help

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Quick Facts — Merger Agreement Lawyers

What is Merger Agreement Drafting?

A merger agreement is a legal contract that specifies the terms and conditions for two or more businesses to become a single company. It has to explain various aspects of the merger, such as how assets and liabilities will be transferred.

Read on to learn key terms to include in a merger agreement, how to draft it so that it’s clear and specific to prevent disputes, and how a professional lawyer can assist you with the contract-drafting process.

What Key Terms are in a Merger Agreement?

A merger agreement usually contains the following core components:

  • Type. Explain the type of merger, such as if it’s a multi-step or spin-off.
  • Purchase price. This outlines how shareholders in the target company are compensated.
  • Assets. This section lists all the assets that will be included in the deal.
  • Representations and warranties. These are formal statements parties make to each other to encourage a smooth process, such as regarding their financial standings.
  • Covenants. This section outlines each party’s obligations before and after closing, such as gaining required approval.
  • Closing conditions. There might be requirements parties need to meet prior to finalizing the deal, which should be specified.
  • Indemnification. This section should include information about how problems are dealt with after closing. If the merger falls through, there should be clarity about who will be liable for liabilities prior to the merger.
  • Dispute resolution. If parties disagree and can’t resolve it, the agreement will provide a dispute-resolution method to help them, such as arbitration.

What are Tips for Drafting a Merger Agreement?

Now that you know what common key terms are included in a merger agreement, there are some additional tips to consider when drafting it. These include the following.

Outline Legal Remedies for False Statements

After explaining what representations and warranties are included in the agreement, it’s important to include provisions for how false statements can be dealt with. Explain the legal remedies to protect your interests.

Provide Indemnification Details

Your indemnification clauses should include information about who is responsible if problems reveal themselves after closing. You should also provide clarity about what types of claims will be covered and who will pay the costs associated with them. It’s also important to specify if there is a cap on damages.

Explain Closing Conditions

There are specific conditions to be met prior to closing the deal. You should state these, such as regulatory approvals. It’s also important to specify what happens if these conditions are not met to prevent misunderstandings, such as that parties can walk away from the deal.

Consider What Happens after the Merger

Some things might occur after the merger, like retaining key employees. It’s usually in your best interest to write these into the agreement so that there’s clarity between parties throughout the entire merger process.

Include Detailed Deal Descriptions

The deal must be clearly described, such as by stating what parties are involved and what assets or liabilities will be transferred. Be as detailed as possible for clarity, down to naming the decision-makers’ contact information.

Ensure Legal and Regulatory Compliance

An important aspect of merger agreements is remaining compliant with all laws and regulations. It’s both parties’ responsibility to review the target company’s legal records to minimize their non-compliance risks.

Specify Payments

The agreement’s consideration must be detailed, such as by explaining what form of payment applies. This could be cash, stock, or earnouts, for example. Make sure that the payment you’ve chosen matches the target company’s financial health and the goals of the merger.

How Does a Lawyer Help You with Merger Agreement Drafting?

A merger agreement needs to be specific and detailed, so you might want to hire a lawyer to draft it for you. Here’s what they’ll do to help you through the contract-drafting process.

  • They’ll structure the merger by considering the right framework for the parties involved.
  • They’ll draft key transaction terms, writing them in clear, specific language that all parties can understand to prevent disputes.
  • They’ll clearly define all parties’ obligations before and after closing to prevent misaligned expectations.
  • They’ll allocate risk by including specific provisions in the agreement, such as indemnification and liability clauses.
  • They’ll align the agreement with all regulatory and corporate compliance. This involves managing any required filings to keep the deal legally valid.
  • They’ll conduct due diligence to reduce your risks.
  • They’ll negotiate key terms with the other parties involved on your behalf to draft a mutually-favorable agreement.
  • They’ll review a merger agreement you’ve already drafted to check it for accuracy.

Where to Find a Lawyer for Merger Agreement Drafting

If you need to hire a lawyer to draft your merger agreement, you don’t have to wonder where to find one who’s experienced and reputable. By using an online legal platform, you can access a network of qualified lawyers who are experienced to help you, from the comfort of your home.

ContractsCounsel is one of the biggest online legal marketplaces that gives you access to a curated network of vetted lawyers. Instead of finding a lawyer, you’ll post your request for a contract to be drafted or reviewed and lawyers will reach out to you.

To request that an experienced lawyer on the platform drafts your merger agreement, here are the easy steps to follow online:

  1. Go to the ContractsCounsel marketplace.
  2. Post your project for free. You can add a few details to help you find the most suitable lawyer.
  3. Wait for lawyer bids. You’ll receive multiple bids from lawyers directly on the platform who have the experience to draft your specific contract.
  4. Review the lawyers’ profiles. Go through the platform’s lawyer data, such as their location, client ratings for previous projects, expertise, and credentials.
  5. Connect with a lawyer you think is best suited to your requirements and hire them to draft your merger agreement for a flat fee.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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