Mergers and acquisitions (M&A) is the catch-all term used to refer to the different forms for transferring or consolidating ownership of businesses and assets. Although the terms merger and acquisition are used interchangeably, they have different legal meanings. When one company (the acquirer) purchases the stock, equity interests, or assets of another company, the transaction is called an acquisition. Sometimes an acquired company continues to operate independent of the acquirer, and sometimes the acquired company ceases to operate independently and is absorbed by the acquirer. Mergers, on the other hand, are generally the combination of two companies, and result in the formation of a new company.
In Texas, mergers and acquisitions (M&A) are governed by both state statutes and federal law. Under Texas law, specifically the Texas Business Organizations Code (BOC), the process for M&A is outlined with specific provisions for different types of business entities such as corporations, limited liability companies (LLCs), and partnerships. An acquisition in Texas can occur through the purchase of a company's stock, equity interests, or assets. Depending on the structure of the acquisition, the acquired company may continue to operate independently, or it may be completely integrated into the acquiring company. In a merger, two companies combine to form a new entity, with one company typically surviving and the other dissolving. The BOC requires certain procedural steps to be followed, including approval by the board of directors and shareholders of the companies involved, filing of a plan of merger or acquisition with the Texas Secretary of State, and adherence to any applicable federal regulations, such as antitrust laws enforced by the Federal Trade Commission (FTC) and the Department of Justice (DOJ). It is advisable for companies to consult with an attorney to navigate the complex legal and regulatory landscape of M&A transactions.
