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The Role of a Board of Directors in Mergers and Acquisitions

Board of Directors in Mergers and AcquisitionsThe direction of the board of directors’ principal role involves strategy, governance, and oversight of management, which includes general oversight of a company’s day-to-day activities. But what is the role of the board when it comes to mergers and acquisitions?

The Role of a Board of Directors in Mergers and Acquisitions

The depth of the board’s involvement depends on the scope and significance of the transaction as such relates to the heart of the company. For a small transaction the board may take a more relaxed role. Yet, for a substantive event, the board will take an active and direct role.

  1. Buy Side: The board of directors must address how the proposed target will align with the company from a strategic perspective. Does the deal make sense? Sometimes the numbers just do not “add up.” The board’s focus therefore needs to be on the assumptions underlying the deal, as well as the successful integration of the new company.
  2. Sell Side: The board of directors has two primary obligations. One, the board must maximize the potential return for shareholders by seeking the best price reasonably available. Two, the board must to assess whether it is an opportune time to sell the company. On the sell-side, especially with a prospective sale of all or substantially all of the equities or company assets, the board must stay active throughout the process, providing insights to and oversight of management and any company advisors.

A fully involved board can help increase shareholder value, reduce risk for potential litigation, and maintain stability within the organization during potentially trying times.

Board of Directors in Mergers and AcquisitionsIf you have any questions about the Role of Board of Directors in Mergers and Acquisitions, please contact Offit Kurman attorney Mike Mercurio at mmercurio@offitkurman.com or 301.575.0332. Mr. Mercurio regularly serves as outside general counsel to clients on matters related to corporate and business law, commercial transactions, government contracting and real estate.

Offit Kurman Mergers and Acquisitions (M&A) Practice Group

Our Mergers and Acquisitions attorneys have earned strong reputations for handling the gamut of business combinations and sale transactions regularly faced by private enterprises with skill, expertise, and efficiency. We represent mid-market companies in deals of varying size and complexity. Our comprehensive services include the sale, purchase, restructuring and consolidation of business entities and divisions, management buy-outs, exit and succession planning and joint venture transactions.

To learn more about Offit Kurman’s Mergers and Acquisitions (M&A) Practice Group, please fill out our contact form. You can also connect with Offit Kurman via FacebookTwitterGoogle+YouTube, and LinkedIn.