One of the most confusing aspects of corporate law and practice for new attorneys is understanding the different structures for M&A deals, both private and public. In private acquisitions, the parties and their counsel must make a threshold decision as to whether to acquire the target business through a stock acquisition, an asset acquisition or a merger. Choosing a merger structure, in turn, raises a follow-up decision about whether to proceed with a forward, forward triangular or reverse triangular merger (with direct reverse mergers also being a rare possibility).

Public deals come with their own set of structuring decisions. A public merger can similarly be structured as a direct or indirect forward or reverse merger. The parties must also decide at the outset whether to structure their deal as a single-step merger or as a two-step merger in which a front-end tender offer precedes a back-end merger.

In the private M&A context, several factors and potentially competing interests influence the decision whether to do a stock or asset deal, including:

The decision to structure a private deal as a merger rather than a stock acquisition, in turn, depends on having enough stockholders willing and available to agree to the sale. The structure of the merger itself also depends on issues of consents and tax considerations.

In a public M&A deal, the parties may prefer a front-end tender offer structure over a one-step merger because of its shorter timetable to closing. Single-step mergers, on the other hand, allow for acquisition of the entire target company in one step.

To help orient new M&A attorneys to the issue of deal structure, Practical Law is featuring these resources: