Sunday, November 10, 2013

2 Quick Tips on Acquiring Control of a Public Company

In our pursuit to delve into and discuss the emerging markets, private equity, finance, capital structures and more we have run ran across a great articles written by Jeffery Bell, ESQ for Morrison and Foerster (A Law Firm).   The Paper titles "The Acquisition of Control of a United States Public Company" has an indepth look at the legal side of buying a controlling interest in a Public Company.  In part, when discussing purchasing shares from a private party, Mr Bell writes:

(b) Required Approvals.
 Stockholders and Board of Directors. The approval of neither the target’s board of directors (“Board”) nor its stockholders is required in connection with a privately negotiated purchase of a controlling interest by an acquiror from one or more stockholders of the target. However, the purchase of a controlling interest is usually the first step in a plan by the acquiror to acquire (or potentially acquire) all of the target’s outstanding stock. The subsequent acquisition of the remaining shares held by the minority stockholders in a second step transaction is often called a “squeeze-out” and is discussed in Section IV. In order to preserve the ability to conduct a squeeze-out in the near term, an acquiror will need to qualify for an exemption under Delaware’s business combination statute5 (as well as any other applicable anti-takeover provisions, discussed in Section II.C). As a result, even though the target’s Board approval may not be required in connection with the acquisition of a controlling interest in the target, acquirors frequently insist upon Board approval as part of an overall acquisition of the target by the acquiror.  
 HSR. Clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), may be required even in the case of a purchase of shares from stockholders of the target. If the applicable requirements (discussed in Section II.D.1) are met, the acquiror will need to make a filing with the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”) so that the impact of the transaction on competition in the relevant markets can be reviewed. HSR imposes a waiting period of 30 days (or 15 days, in the case of cash tender offers) during which the regulators may submit a “second request” for additional information about the transaction or the parties. In many cases, the expiration or termination of the waiting period under HSR is what drives the timing of the transaction.

A full look at the article can be found here: "The Acquisition of Control of a United States Public Company" and you may want to check out some publication written by the law firm on Mergers and Acquisitions at MOFO.com  (funny name, but quite a powerhouse law firm).

-The MicroCapCompany Team
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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here

Do you have experiences in Mergers, Public Company Buyouts, or the like?  Tell us about your expertise, experiances or Wall Street tales below in our comment sections of start a conversation on Twitter @MicroCapCompany 


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