Top Highlights

• Negotiated acquisitions of U.S. businesses are typically accomplished in one of the following three ways: (i) by purchasing the assets of the target business; (ii) by acquiring the shares of the target business; or (iii) by effecting a statutory merger (in most cases, with a newly formed subsidiary of the acquirer). Each method is discussed below.
• the acquirer only assumes those liabilities that it specifically agrees to assume. However, an acquirer may be responsible for certain liabilities, by operation of law, most notably environmental liabilities, product liability claims, certain tax liabilities and certain pension liabilities relating to employees of the acquired business particularly...
• An acquirer may mitigate successor liability concerns by excluding certain assets from the transaction, or by acquiring the assets through a newly formed shell subsidiary, thereby protecting the acquirer’s other assets.
• If the acquirer is able to acquire a majority, but not all, of the target’s outstanding shares, the acquirer may nevertheless be able to effect a second-step merger between the target and the acquiring subsidiary to eliminate the minority shareholders. Because of appraisal rights and the possibility of litigation by minority shareholders, however, ...
• Mergers and consolidations generally require approval of the shareholders and the boards of directors of all constituent corporations, and dissenting shareholders of the constituent corporations often have appraisal rights (that is, the right to file an action to receive the “fair value” of their shares) that are often not available in other acquis...