Question

Name at least two risks for either acquirer OR seller PRIOR to closing a transaction AFTER the merger agreement is signed

Answer 1

2 Risks prior to closing and after a merger agreement is signed:

1. Integration risk

After agreement signing, the buyer /seller shall start the process of integrating the 2 companies by onboarding operations/ assets/ processes/ employees. Due to complications arising out of the integration, there is a risk that the integration failure may result in a failure iof meeting the objectives of the buyer with respect to the acquisition.

2. Litigation/Government approval risk

After the announcement of merger sign, there is a risk that litigation can be filed by parties affected by the merger which may jeopordize the completion. It could be vendors/IP violation/ Customers/ employees etc who can file suits.

There could be mergers where government approval is required for closure which may come or not. This could also pose as risk for completing the M&A exercise