Best Merger & Acquisition Lawyers in California

About Merger & Acquisition Law in California, United States

Merger and acquisition (M&A) law in California covers the legal processes involved when two businesses combine (merger) or when one business purchases another (acquisition). This area of law includes negotiation, documentation, regulatory approval, and the transfer of company assets, shares, or management control. M&A transactions are common among businesses seeking to expand operations, diversify products or services, or gain a competitive edge. California's thriving business environment makes it a hot spot for M&A activity, especially in sectors like technology, biotech, real estate, and entertainment.

Why You May Need a Lawyer

Engaging in an M&A transaction involves numerous legal, financial, and strategic considerations. Here are some situations where you may need a lawyer:

• Navigating complex transactions: M&A deals often require expert negotiation and structuring to achieve desired outcomes.
• Due diligence: Lawyers help conduct and review due diligence to identify any legal liabilities and assess the value of the target company.
• Drafting and reviewing agreements: M&A transactions involve numerous contracts and legal documents, including purchase agreements, confidentiality agreements, and non-compete clauses.
• Regulatory compliance: Ensuring compliance with both federal and state laws, including antitrust regulations.
• Resolving disputes: Lawyers assist with any disputes that arise during or after the transaction, including breaches of representations and warranties.
• Employment and IP considerations: Handling employee transitions, intellectual property rights, and management of proprietary business processes.
• Structuring tax-efficient deals: Navigating federal and California tax consequences related to mergers or acquisitions.

Local Laws Overview

California’s legal landscape for M&A is shaped by a mix of state-specific regulations and federal laws. Here are some key aspects:

• California Corporations Code: Sets out requirements for mergers, consolidations, and sales of assets involving California corporations, including shareholder approval procedures and rights to dissent.
• Securities Regulation: State-level oversight through the California Department of Financial Protection and Innovation governs the issuance and transfer of securities during M&A.
• Antitrust Laws: Both federal laws and the California Cartwright Act can apply to prevent anti-competitive mergers and acquisitions.
• Employment Law: California has strict labor laws that may impact employee transfers, layoffs, or benefits during business transitions.
• Environmental and Industry Regulation: Transactions involving companies subject to particular environmental or industry-specific regulations (such as healthcare, banking, or utilities) must comply with additional state rules.
• Local taxation: California’s franchise and income tax laws may influence the structure and strategy of M&A deals.

Frequently Asked Questions

What is the difference between a merger and an acquisition?

A merger involves the combination of two companies into a single entity, often with shared management and operations. An acquisition refers to one company taking control of another, either by purchasing its assets or acquiring its shares.

Do I need shareholder approval for a merger in California?

Yes, California law typically requires majority shareholder approval for mergers. In some cases, a supermajority or unanimous consent may be necessary, depending on the company's bylaws.

How is due diligence conducted in an M&A transaction?

Due diligence involves a comprehensive investigation into the target business’s financials, operations, legal obligations, liabilities, intellectual property, and contracts. Legal counsel plays a key role in reviewing these issues.

Are M&A transactions subject to California antitrust laws?

Yes, both federal antitrust laws and the state’s Cartwright Act may apply. Deals that could reduce competition may face regulatory scrutiny or require modification.

What are dissenters’ rights?

Dissenters' rights allow shareholders who oppose certain major transactions to demand fair value for their shares, rather than participate in the new entity.

Can non-compete agreements be enforced in California following an acquisition?

California has strict limitations on non-compete agreements. In most cases, such clauses are unenforceable except in narrow circumstances involving the sale of business ownership interests.

What happens to employees after a merger or acquisition?

Employees may be retained, reassigned, or laid off, depending on the terms of the transaction. California’s labor laws, including advance notice requirements under the WARN Act, may apply.

How are intellectual property rights handled in an M&A?

Intellectual property is a critical asset in many deals. Due diligence identifies IP ownership, registration, and validity. Transfer of rights is formalized in transaction agreements.

Are there specific regulations for cross-border M&A in California?

Yes, international deals may trigger additional requirements such as review by the Committee on Foreign Investment in the United States (CFIUS) and compliance with export control laws.

What role does the California Secretary of State have in M&A?

The Secretary of State’s office handles filings related to mergers, name changes, and other corporate governance matters necessary for M&A transactions involving California entities.

Additional Resources

• California Secretary of State - Business Programs Division: Source for business entity filings and corporate status.
• California Department of Financial Protection and Innovation: Oversees state securities laws and regulations.
• United States Securities and Exchange Commission (SEC): Regulates interstate securities transactions and public company filings.
• California Bar Association: Helps locate qualified business and corporate attorneys.
• Small Business Administration (SBA): Provides guides and support for small businesses considering mergers or acquisitions.

Next Steps

If you are considering a merger or acquisition in California, start by gathering all relevant information on your business or the target business. Consult with a lawyer who specializes in M&A to evaluate risks, opportunities, and compliance matters. A legal professional can guide you through due diligence, negotiation, drafting of agreements, and regulatory filings. Take advantage of the resources and organizations listed above, and do not proceed with any transaction before understanding your rights and obligations under California law. If you are unsure where to begin, contact the California Bar Association or a local business lawyer for an initial consultation.