Middle Market M & A, 2nd Edition

CHAPTER 18Legal Documentation

Legal counsel plays an important part in mergers, acquisitions, and other transactions. This chapter describes the role lawyers play, how it relates to the roles of other advisors and to the principals in the deal, and some of the documentation that attorneys should be expected to provide. This chapter should not be considered legal advice, of course; it is a guide to help principals and advisors better understand the legal elements of an M&A transaction.

THE ATTORNEY’S ROLE

A fundamental principle of legal representation in a merger or acquisition transaction is that an attorney involved in the deal does not represent “the deal,” but rather a party participating in the deal, generally the buyer or the seller. The interests of the buyer and the seller are adverse in a merger and acquisition transaction, and any legal representation of the deal would result in a conflict of interest. An attorney generally may not represent more than one party who has interests adverse to another in any matter. In an M&A deal, it is also possible that there are multiple adverse or potentially adverse interests, specifically in a deal in which the recognized buyer or seller actually consists of multiple parties. In those transactions, a deal attorney may have conflicts of interest within the buyer or seller group, as those parties may have certain interests that are adverse to each other.

A transactional attorney adds value to the deal by identifying and understanding ...