M&A deals have a wide range, with particular structures currying favor for a period and then lapsing into irregular use. Some of the more basic structures remain constant.
If you want to sell one of your company’s businesses, and not the rest, and the businesses all operate within the same entity, then you will sell the assets of the division of the company which operates that business. That asset sale will normally take place through an Asset Purchase Agreement, often a long-winded contract including detailed descriptions of the assets being sold as well as of the liabilities of the business which the buyer is assuming.
The best argument for putting each business of a company in a separate entity is the difficulty separating out one business from the rest in one entity.
When an acquirer wants all of a company’s businesses, which thankfully is often the case, it will normally acquire all of the stock (and hopefully options) in the company. The Stock Purchase Agreement (or Merger Agreement) implementing the stock purchase will have many of the same clauses as a similar Asset Purchase Agreement, but is less complicated because different businesses within the company do not need to be distinguished.
The purchase currency in an M&A deal also has variants. Cash is highly desirable, of course, but often an acquirer whose stock is publicly traded will prefer to use its stock as the purchase currency, at least when its stock is doing well or when equity markets are inflated. During stock market bubble years, an acquirer’s stock trading at an inflated value is by far the most popular currency. Acquired company shareholders are fine with that currency, until the equity markets tank, and the acquirer’s shares which they received in the transaction are suddenly worth much less.
My role is to provide top-notch legal representation from the term sheet through due diligence and the closing. I’ve done it before. I now handle smaller M&A deals from beginning to end, and manage due diligence in larger deals.
Note: M&A deals are among the most sensitive on a human level, which often receives insufficient attention. Different corporate cultures with different ways of doing business need to be successfully integrated on a human level in order for the deal to reap the benefits that its commercial synergies promise.