Mergers and Acquisitions Attorneys

Merger and Acquisition FAQs

• What are the 12 legal issues with government contract mergers?

  Government contractors have significantly increased mergers and acquisitions in recent years. A stream of recent stories in the Washington Post and New York Times have documented this. The acquisition of a business that has earned a government contract frequently provides the buyer an opportunity to increase its market share and strengthen its capabilities within an existing industry. The addition may also allow the new parent company to expand its portfolio to market and develop a new government contracting capability that was previously not available.

  In the process of government contractor mergers and acquisitions, these problems may arise:
  
  1. Disclosure of any contractual or regulatory non-compliance that predates the transaction, including violations of the False Claims Act.
  
  2. Are there any prior suspensions or debarments that may affect the company to be acquired.
  
  3. Past performance ratings of the company to be acquired by government agencies, and the impact of those scores on the buyer's ability to win other government contracts.
  
  4. Analysis of the remaining years and potential accounts receivable income from existing and potentially new contracts held by the business to be purchased.
  
  5. The assignment or novation of the government contracts from the business being purchased.
  
  6. The loss of small business status or other socio-economic preferences that were initially used for the award of government contracts and will change as a result of the acquisition.
  
  7. The transfer of top-secret clearances and facility access.
  
  8. Transfer of the intellectual property rights owned by the business being purchased.
  
  9. Conflicts of interest, which may prevent the buyer from bidding on future government contracting opportunities.
  
  10. Are all of the Federal Supply Schedules current, up-to-date, and compliant with specific regulations (Price Reduction Clause).
  

  11. Are there subcontracts and teaming agreements the business to be purchased may hold, will they remain enforceable and compliant after the transaction.
  
  12. Foreign purchases require CFIUS notification and foreign ownership and control mitigation plans.

• Types of government procurement legal issues our M&A attorneys handle

  At Whitcomb Selinsky, PC, our federal government procurement lawyers can assist your business with a wide range of legal matters pertaining to federal government procurement and contracts with government agencies, including but not limited to the following:

  • Bid protests
  • Federal Acquisition Regulation (FAR) compliance and claims arising under the Competition in Contracting Act
  • False Claims Act violations and procurement fraud issues
  • Freedom of Information Act (FOIA) issues and exemptions
  • Government contract consulting matters; Contract disputes, and claims arising under the Contract Disputes Act
  • Mergers and Acquisitions affected by government contracts
  • Supply chain regulation issues

  Other legal matters may also arise in government procurement, and the dedicated government procurement attorneys at Whitcomb Selinsky, PC, can assist your business.

• Do I need legal advice from an experienced government contracts law firm?

  Navigating mergers and acquisitions in the context of government contracts is a challenge. There are various legal regulations and considerations at play, which can make it difficult to understand the proper course of action. However, a knowledgeable government contracts attorney can make all of the difference to help you avoid pitfalls and resolve any issues that might arise.

• What are the types of mergers and acquisitions?

  M&A encompasses various structures depending on the strategic goals and the relationship between the companies involved. Here are some common types:

  • Merger: This involves two companies combining all their assets and operations to form a completely new legal entity. There are different types of mergers based on industry focus:
    • Horizontal merger: This combines competitors in the same industry, aiming to eliminate redundancy, achieve economies of scale, and potentially gain market dominance.
    • Vertical merger: This integrates a company with its supplier or customer, creating a more efficient supply chain or offering a wider range of products or services.
    • Conglomerate merger: This type of merger combines companies in unrelated industries to diversify, spread risk, and potentially leverage complementary resources.
    • Congeneric merger: This combines companies that serve the same customer base but with different products, allowing for cross-selling opportunities and potentially strengthening their market position.
  • Acquisition: This involves one company purchasing another company, with the acquired company ceasing to exist independently. This can be a:
    • Stock acquisition: You buy a controlling stake in the target company's shares, essentially taking ownership.
    • Asset acquisition: You purchase specific assets and liabilities of the target company, as mentioned in the previous answer on financial transactions.

• What are the key considerations in M&A?

  A successful M&A deal requires careful planning and consideration of several factors:

  • Strategic fit with the client's business: Do the companies' goals, target markets, and product lines complement each other? Will the combined entity be stronger and more competitive?

  • Financial performance: Conducting thorough due diligence is crucial. Analyze the target company's financial health, including profitability, debt levels, and growth potential.

  • Regulatory approvals: Ensure the deal complies with antitrust laws that prevent reduced competition in a market. Additionally, industry-specific regulations might require specific approvals.

  • Integration challenges: Merging two companies involves integrating operations, cultures, and leadership teams. Carefully planning the integration process is critical to ensure a smooth transition and maximize the deal's potential.

  By carefully considering these factors, companies can increase their chances of a successful M&A transaction. For expert guidance, contact our experienced M&A Lawyers today to ensure your deal is successful and compliant.

• What is the difference between a merger and an acquisition?

  While both mergers and acquisitions involve combining businesses, there's a key distinction in their outcome:
  Merger: This creates a completely new legal entity. Both companies involved cease to exist independently and contribute assets and operations to form the new entity. Ownership is often divided between the original shareholders of both companies.
  Acquisition: One company takes over another. The acquired company dissolves, and its assets and operations become part of the acquiring company. The acquiring company's shareholders maintain ownership, and the acquired company's shareholders typically receive compensation (cash, stock, or a combination) for their shares.