What legal preparation, including legal review of contracts, is needed for an M&A?

Hello. I am an M&A attorney at Daeryun Law LLC.

You have asked about the overall legal preparations for an M&A, including the legal review of contracts. I will explain the legal preparations for an M&A at each stage.

First, in the preliminary preparation stage, you must first review whether the transaction is possible.

It is a priority to check whether there are approval requirements or grounds for restricting the transaction under statutes or internal regulations.

At present, there is no single statute in our country that comprehensively governs M&A.

Therefore, it is important to accurately identify and analyze the provisions scattered across various statutes, such as the Monopoly Regulation and Fair Trade Act, the Financial Investment Services and Capital Markets Act, and the Commercial Act.

In the stage of contact with the acquirer, you must identify the permitted transaction forms (asset transfer, share transfer, triangular merger, and the like).

It is advisable to compare the advantages and disadvantages of each transaction structure and establish a strategy.

In the due diligence and progress stage, because issues revealed through due diligence must be reflected in the contract, you must identify legal risks in advance and eliminate risk factors.

In the contract stage, including the legal review of contracts, the parties discuss the allocation of responsibility and utility so as to align with the purpose of the transaction.

At this time, you must clearly grasp the meaning of the contract clauses that carry legal binding force and prepare accordingly.

Legal advance preparation is also important in the final closing stage.

You must review matters such as covenants, and the method of payment in advance and prepare accordingly.

Because various legal reviews and regulatory issues can accompany the M&A process, we recommend proceeding systematically with the assistance of an M&A attorney.