Corporate transactional law encompasses the legal work involved in structuring, negotiating, and documenting business deals. From mergers and acquisitions to joint ventures, equity financings, and asset purchases, these transactions can be among the most consequential events in the life of a business. Nebraska businesses of all sizes engage in transactions that require skilled legal counsel to ensure that the deal is structured efficiently, risks are properly allocated, and the interests of the client are protected throughout the process.
Mergers and Acquisitions
Mergers and acquisitions involve the combination of two or more businesses through various legal structures. In an asset purchase, the buyer acquires specific assets and liabilities of the target company. In a stock or equity purchase, the buyer acquires ownership interests in the target entity itself. In a merger, two entities combine under applicable state law to form a single surviving entity.
Each structure has distinct legal, tax, and practical implications. Asset purchases are often preferred by buyers because they can avoid assuming unwanted liabilities of the target company. Sellers may prefer stock purchases for tax treatment reasons. The choice of structure is typically negotiated by the parties and their counsel based on the specific circumstances of the deal.
Nebraska's Business Corporation Act, found at Neb. Rev. Stat. Chapter 21, governs corporate mergers and related transactions for Nebraska corporations. LLCs are governed by the Nebraska Uniform Limited Liability Company Act. Both statutes impose procedural requirements including board and shareholder approvals, filing requirements with the Secretary of State, and in some cases rights of dissenting shareholders to seek appraisal of their shares.
Due Diligence
Before closing any significant transaction, the buyer typically conducts due diligence, a thorough investigation of the target company's legal, financial, and operational condition. From a legal standpoint, due diligence involves reviewing:
The results of due diligence inform the negotiation of representations and warranties in the purchase agreement and may affect the purchase price, deal structure, or the decision whether to proceed at all.
In a business acquisition, the deal you negotiate is only as good as the due diligence that informs it. Identifying problems before closing gives buyers the leverage to address them properly rather than inheriting unexpected liability.
Transaction Documentation
Corporate transactions require careful documentation. The primary agreement in an acquisition is the purchase agreement, which sets forth the terms of the deal, the representations and warranties of the parties, the closing conditions, and the indemnification obligations that survive closing. Supporting documents typically include disclosure schedules, employment agreements, transition services agreements, non-compete agreements, escrow arrangements, and assignment documents for transferred assets.
Well drafted transaction documents are not merely administrative formalities. They allocate risk between buyer and seller, establish the legal framework for post-closing relationships, and provide the basis for resolving any disputes that arise after the deal closes.
Equity and Debt Financings
Nebraska businesses often raise capital through equity or debt financing transactions. Equity financings involve issuing ownership interests in the company to investors in exchange for capital. These transactions are governed by federal and state securities laws, which impose disclosure requirements and restrict how securities may be offered and sold. Nebraska businesses seeking to raise capital must comply with the Nebraska Securities Act as well as applicable federal exemptions.
Debt financings involve borrowing capital, typically through term loans, revolving credit facilities, or issuances of notes. These transactions require careful attention to loan documentation, security interest perfection under Nebraska's Uniform Commercial Code, and the negotiation of financial covenants and default provisions.
Working with Transactional Counsel
Engaging experienced transactional counsel early in the process can make a significant difference in the outcome of any corporate deal. Attorneys who regularly handle corporate transactions bring not only legal expertise but also practical insight into deal structures, negotiating dynamics, and common pitfalls that can derail or undermine a transaction.
The attorneys at Horgan Law Firm have experience advising Nebraska businesses on a broad range of corporate transactions. If you are contemplating a merger, acquisition, financing, or other business transaction, we invite you to contact us to discuss how we can help.
