One of our clients is a French company that is expanding its activities in Brazil, significantly changing the way it operates in the country. The expansion is being led in an accelerated and ambitious manner, with investments being made concurrently in several Brazilian companies, from different – albeit related – fields of activity, of the most diverse sizes, in several Brazilian states.

Working on all of this company’s operations in Brazil allows us to learn about and contribute to its expansion strategy, as well as suggesting the most recommendable legal structure for each operation and making acquisitions feasible, also from a legal perspective.

Because of the diversity of cases, most of the operations are carried out as corporate acquisitions – the well-known M&A (mergers and acquisitions) market – while others take the form of buying and selling assets. In either format, the operation is implemented through a series of interconnected contracts, from those regulating the purchase and sale of quotas or shares, or of assets such as brands and contracts, to those providing services to key people in the acquired companies. But the definition of which contracts will be used for each operation depends on the structure developed for the specific case, which in turn can vary according to the stage, size and structure of the companies to be acquired (the target companies).

A very interesting question that arises during these processes is whether there is an optimum point, or preparation for the company to be acquired – or, when analyzed from the opposite perspective, sold. And, if there is such a point, whether it would be necessary to wait for the target to be legally structured so that the M&A could take place.

This question is extremely important because in case it is necessary to wait for the target to be “prepared” or structured, the basis of the negotiation may be radically modified, or one of the parties could lose interest in going ahead with the deal. And none of these scenarios are of interest to our client, nor to the parties usually involved in an M&A.

And working with different M&As allows us to state quite confidently that there is no universal ideal corporate and contractual stage for a company to be acquired, and in the overwhelming majority of cases, there is no need to wait for a moment to carry out an M&A operation. On the other hand, an M&A will be legally structured based on the corporate and contractual stage of development of the target. In other words: the most recommended legal format will be different for each target, depending on its corporate structure, internal organization and contractual employees.

Therefore, from a legal perspective, although there is no optimum point for a target to be acquired, there will be a more advantageous format for each target, depending on its stage of corporate and contractual development.

Of course, there is one caveat to make: although in the overwhelming majority of cases, it’s not necessary to wait for a moment to carry out an M&A operation, if it’s in the interests of those involved, a deadline can be set

for certain adjustments and the implementation of legal structures to be carried out, everything being regulated and formalized in the applicable contracts, and aiming for an M&A concluded safely and addressing the concerns and needs of those involved.

With this, we realized that analyzing the target‘s stage of corporate and contractual development allows us to present legal alternatives that optimize operations, and that this practice has a lot to contribute to the success of the post-acquisition phase.

And it’s even more interesting to realize that an individual analysis can be useful for both sides of the negotiation: if, on the one hand, the acquiring company is interested in analyzing the target to assess the best structure for the operation, on the other hand, targets benefit from undergoing legal preparation before entering into a sale operation, because they tend to be negotiated in formats that are more interesting for their partners and for the expansion and perpetuity of their own business.

In our work we analyze these corporate and contractual stages of companies and draw up development strategies, where appropriate, all with the aim of suggesting and implementing operations that maximize the gain of the parties involved, so that the operation can be carried out safely and effectively.

It will also be a pleasure to follow the development of your business! Contact us by novosnegocios@chenut.online