M&A Nuggets: A Shrinking World
The merger boom in recent years has included a significant uptick in cross-border transactions, whether by a foreign company acquiring a United States company or a United States company acquiring a foreign company. As the world continues to shrink, foreign investors with substantial wealth seek a place to deposit their money and as the pressure to grow continues, the pace of cross- border transactions should also continue. The laws that govern mergers in foreign countries often differ from the merger laws in the United States. It is therefore important to understand how foreign laws may affect a cross-border transaction. For example, corporate law in England allows a purchaser which acquires 90% of the ownership of a company to require the remaining 10% ownership to sell. This “squeeze-out” does not exist in many states in the United States. Many foreign countries require an asset sale to be approved by a higher percentage of shareholder vote than required in the United States. The way business combinations must be approved in foreign jurisdictions can also differ from the rules in the United States. For example, in China, which has many state-owned companies, a sale of any such company must be approved by the government. So, if you become engaged in a merger transaction with an international company, make sure that you understand the applicable M&A laws.
If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at firstname.lastname@example.org or 443-738-1522.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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