Guide to Corporate Transactions =============================== Corporate transactions cover a wide range of activities that can apply during the lifecycle of a business. Here we provide a summary of some of the typical transactions that occur in the corporate sphere. **If you need advice or representation on any Corporate Law matter, click below for a free initial consultation with one of our expert Corporate solicitors.** [BOOK CONSULTATION](https://vardags.com/contact "BOOK CONSULTATION") Mergers & acquisitions -------------------------- A [merger](https://vardags.com/law-guide/mergers-and-acquisitions/what-is-a-merger)occurs when two companies amalgamate into one. There are five types of mergers: - **Horizontal merger:** two companies in the same stage and industry merge, for example, to reduce competition - **Vertical merger:** two companies in the same industry, but at different stages of development merge into one, for example, to give the acquiring firm more control over its manufacturers - **Conglomerate merger:** two companies in unrelated industries merge, for example, two companies with different seasonal demand may merge to ensure year-round revenue - **Congeneric mergers:** two companies that serve the same market in different ways merge, for example, a phone manufacturer and a mobile network - **Market-extension merger:** two companies that sell the same products in different markets merge, for example, an alcoholic beverage company purchasing a chain of bars In an [acquisition](https://vardags.com/law-guide/mergers-and-acquisitions/what-is-an-acquisition), one company absorbs another. Acquisitions can be distinguished into two groups: - Friendly acquisitions: the board and shareholders of the acquired firm agree to being subsumed by the acquirer - Unfriendly acquisitions (hostile takeovers): the larger firm purchases large stakes of the smaller firm, without their agreement, to obtain a controlling interest Share and Asset Purchase ------------------------ When a business is to be sold, there is a choice as to whether to structure the transaction as a share purchase or an asset purchase. A share purchase means that the buyer will acquire the shares in the company (which will typically be the entirety of the issued share capital). Share purchase is also possible in relation to some of the shares by either existing shareholders or the company itself. An asset purchase involves the buyer negotiating which assets and rights they will take on. They may, for example, choose to acquire responsibility for certain liabilities but not others. Management buy-outs & buy-ins --------------------------------- A management buy-out occurs when a company's existing managers buy out a significant proportion (or the entirety of) the company. The purpose of this is for the managers to have a greater degree of control and influence on the direction of the company. These can be a useful business solution to allow it to remain controlled by those who already understand how to run it effectively and allows for a smooth transition to the new owners. A management buy-in works in the same way as a buy-out, except the purchasers are an external management team, from outside of the company. The existing managers will be replaced by those who have purchased the interest in the company. A leveraged buy-out is the purchase of a company with a significant proportion of debt financing. The target company in this instance will usually not have agreed to the takeover, and their assets can be used as collateral by the acquiring company. Corporate finance ----------------- Companies need to 'raise capital' in order to fund their operations and investments. There are several ways a company can do this: - Initial public offerings (IPOs), which is where a business first lists its securities on a securities exchange or offers them to the public under a disclosure document. There are stringent listing and due diligence requirements here that must be adhered to - Equity financing, which involves selling a section of the business to an investor. This can be lucrative, but means handing over some control of the company - Equity restructuring - Venture capital and private equity - Joint ventures, which is a commercial agreement between two or more participants to cooperate in relation to a joint business objective - Securitisation, which is a financing method that involves selling large pools of cash-generating assets (such as mortgages) to a special purpose vehicle (SPV) who pays for the assets by issuing interest-bearing securities into the capital markets - Debt financing, which involves the company borrowing money from a lender and agreeing to pay it back (with interest) at later date. Typical forms of debt finance are a loan, a credit card, or a corporate bond. Corporate bonds are issued by a company to an investor. Interest payments are paid to the investor until the bond "reaches maturity", when the payments stop, and the original investment is repaid The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you. What our clients say -------------------- Throughout my time using Vardags I felt that I have always been in the best possible hands. I enjoyed an excellent level of service and received accurate and precise legal advice. The lawyers are hugely talented, sensitive and... focused on getting the very best results. Their no-nonsense and direct approach is most valuable when time and costs are of the essence. I highly recommend them over and above any other law firm I have ever dealt with. Thank you Vardags. Valerie A responsive and helpful service; quick to understand and advise on the issues. Ian Smith Outstanding firm and of highest level of professionalism. I would highly recommend Vardags as best in class in what they do. Sandip Kotecha They were magnificent, in both practical and emotional terms, during what was a very upsetting and difficult period of my life. The advice given was always well considered and sound. In summary, do not think twice about engaging... this firm, they have been nothing short of brilliant, and in my opinion you will not find better. Nicole Barnes Nicola and the team are the best support you could ask for at the most difficult of times. As well as being knowledgeable, forward thinking, organised and hard-working, she has empathy and goes above and beyond for her clients. C An extremely capable & exceptionally committed family law team for medium-to-very high wealth individuals led by the financial genius Dr Stephen Bence and highly distinguished Ayesha Vardag. Martin Waters