Share Acquisition
by Haekal
M&A transaction is the main core of corporate law practice, hence it is important to law students and some professionals that are related to corporate transactions to understand the concept. This article will give you the essence of corporate works by discussing the steps and required documents on the share acquisition in Indonesia. Since this article is made for non-legal professionals, this article divides the subject into the three separate articles to make it focus on every aspect of M&A transactions.
Commonly, share acquisition process is divided into 3 stages, the pre transaction, the transaction and post transaction. In case a lawyer represents the buyer, they need to conduct legal due diligence (“LDD”) on the target company. The goal of these stages is to point out every possible risk that may appear in the presence and the future. The results of LDD (“LDD Report”) may not only be used to decide whether the clients should continue the transaction or not, but also used as the bargaining position on the negotiation with the seller.
After the LDD process finished it might continue to the next stage. There are some documents that need to be prepared, such as a share purchase agreement, Third Party Consents, and any documents depending on the transaction needs. Please notes that the all parties may needs some documents, such as Confidentiality Agreements, Letters of Intent, Exclusivity Agreements, Disclosure Schedules, HSR Filings, Stock Certificates, Bills of Sale, Assignment and Assumption Agreements, Escrow Agreements and Transition Services Agreements. Please keep in mind that in the documents preparation, communication with the target company is a must. Usually it will take several discussions and meetings with the target company until closing and signing.
Before discussing a post transaction, please be aware that closing structure and post-closing obligations should be considered early on in the deal negotiation process, as they will heavily influence the provisions of the operative transaction agreement.
The parties’ obligations will often not end at closing. The seller is normally required to enter into a number of covenants restricting its conduct for a defined period of time after closing. Depending on the specifics of the transaction, the buyer may also be subject to post-closing covenants, such as a requirement to provide similar employee benefits for a period of time. Other typical post-closing obligations include making certain state filings (such as articles of merger or an amendment to the party’s certificate of incorporation to change the company name), filing press releases, and obtaining third-party consents not received at closing.
The next article will discuss the related sectors to the M&A transaction, such as competition law and the new regulation, such as language law and several amendments on the Online single submission (OSS) system.