What Should I Know About M&A in the U.S.?~米国におけるM&Aのポイント



Hi.  It’s John Sasaki again.

Ichigo made a new friend today.

Today let’s talk about M&A in the U.S.  M&A is a big topic, so I won’t try to cover it in one article.  For today, let me highlight a few preliminary issues that may be of interest to a Japanese company seeking to buy a U.S. company, which may be different than the same issues for domestic M&A in Japan.

1.M&A Structures

There are 3 basic structures in the acquisition of a U.S. company.

a. Asset Acquisition - In an asset acquisition, the acquiring company acquires all or a portion of the assets of the selling company.  The selling company itself remains as a separate company from the acquiring company.  This allows the acquiring company to acquire only those assets (and liabilities) that it wishes to acquire, and also allows the selling company to sell only those assets that it wishes to sell.

b. Stock Acquisition - In a stock acquisition, the acquiring company acquires all or a portion of the stock of the target company from the stockholders of the target company.  Note that the selling party in that case is not the company itself.  This requires the acquiring company to negotiate will each stockholder, so this structure is not ideal when the target company has a lot of stockholders.  Under this structure, the acquiring company cannot pick and choose which parts of the target company to acquire.  The target company itself remains as a separate company from the acquiring company, as a subsidiary company.

c. Merger - In a merger, the target company merges into the acquiring company.  The target company becomes one with acquiring company and is no longer a separate company.  This can be risky because you won’t know what kind of liabilities you are accepting into your company.  So, in the U.S., a triangular merger structure is a more common structure.  This is a merger in which the target company merges with a subsidiary of the acquiring company.  The target and the subsidiary become one, but this keeps the target company as a separate company from the acquiring company.  The merger structure is a common structure when the target company has a lot of stockholders, because only a certain threshold of the stockholders of the target company (e.g., a majority) must approve a merger.

So, how do you decide the appropriate structure for your acquisition?  I’ll discuss that in a future article.


Once you determine the structure, how do you pay for the acquisition?  Basically, you have two choices.

a. Cash – Cash is cash.  Enough said.

b. Stock – You can also use your company’s stock to acquire a U.S. target.  However, if you do so, you will have to comply with U.S. securities laws (as well as Japanese securities laws if you are a Japanese company).  This can complicate your transaction.  Also, you will have to convince the stockholders of a U.S. company to become shareholders in a Japanese company.  For U.S. stockholders unfamiliar with Japanese companies and being shareholders in a Japanese company, it may be a challenge to convince them to accept shares in a Japanese company in exchange for their shares in the U.S. target.

Because of the challenges described above, most acquisitions by Japanese companies of U.S. companies are still for cash.

3.Letters of Intent

In many M&A transactions, the parties will enter into a letter of intent (or LOI) before executing the definitive acquisition agreement.  In the LOI, the parties express their intent to consummate the transaction, based on certain broad terms, such as the structure, the price, the consideration and other material terms.  The LOI is typically non-binding (although certain terms in the LOI may be binding).  The LOI is a way for the buyer to obtain a “soft” commitment from the seller that it is willing to proceed with the sale of the company.  It is also a way for the seller to commit the buyer to the deal.

But, if the LOI is not binding, then I am not legally obligated to close the deal, right?

Well, strictly speaking, yes, that is true.  However, under general principles of U.S. law, even a non-binding LOI imposes a covenant of good faith on the parties (which is also generally part of all contracts in the U.S.).  What does this mean?  This means that you must act in good faith to try to close the transaction.  It doesn’t require you to close the transaction, but you will not be able to terminate the deal for no good reason.

Also, if the LOI contains all of the material terms of the transaction, there is even a possibility that a U.S. court would deem the LOI to be a binding contract.  In that case, your obligation is not limited to a good faith effort to try to close the transaction; you will have a legally binding obligation to close the transaction.

So, be careful before you enter into an LOI, even if it is stated to be non-binding.

4.Due Diligence vs. Representations and Warranties

In a typical M&A transaction, the seller will provide certain representations and warranties to the buyer about the target.  These representations and warranties may then be supplemented and modified based on the buyer’s due diligence efforts on the target.

But what is the interplay between representations and warranties, on the one hand, and due diligence, on the other hand?

Well, for one, representations and warranties place the risk on the seller, which must ensure that the representations and warranties are accurate.  On the other hand, due diligence in the absence of representations and warranties places the risk on the buyer.

So, from the buyer’s standpoint, representations and warranties are more important than due diligence, right?  And if I have really broad representations and warranties, I don’t need to spend a lot of money on due diligence, right?

Well, no, for at least a couple of reasons.

First, one of the purposes of the representations and warranties is to establish the basis on which the buyer is willing to close the transaction (which is why the accuracy of the representations and warranties is typically a closing condition).  If the representations and warranties are not accurate, the buyer doesn’t need to close the transaction.  If you as the buyer don’t do any due diligence, then you won’t find out about the inaccuracy until after the closing.  And, at that point, the transaction is already completed.

Also, even if are able to make a claim against the seller for an inaccurate representation and warranty after the closing, you would need to expend time and money in order to do so.  If, through your due diligence efforts, you can identify inaccuracies in the representations and warranties from the outset, you can make sure that the seller resolves these inaccuracies before the closing.

So, don’t rely excessively on representations and warranties.  At a minimum, make sure to conduct due diligence on those issues that are of particular concern to you.


A common feature of many M&A deals is to impose a non-compete obligation on the sellers.  Otherwise, the sellers could take the buyer’s money, and immediately diminish the value of the buyer’s acquisition by joining a competitor or starting a new competitive company.

However, you should note that non-compete obligations are subject to reasonableness standards in the U.S. (as is the case in Japan).  But, while Japan has a single standard for what is reasonable, the U.S. will have differing standards depending on the relevant state.  What is considered reasonable in one state may not be considered in another state.  More importantly, what is considered reasonable in Japan may not be considered reasonable in the U.S.

California, in particular, has a strong policy disfavoring non-compete obligations.  In general, non-competes in California are unenforceable.  However, there is a limited exception for non-competes entered into by sellers in a sale of a company, but it is narrowly interpreted and still subject to a reasonableness standard.

For example, if you enter into a non-compete provision in an M&A agreement with a shareholder and also one in an employment agreement because the shareholder is also a key employee, the non-compete a provision in the employment agreement may not be enforceable, even though it is entered in connection with the sale of a company.

Also, even if your agreement is governed by another state’s law, if the employee is working in California, a California court may apply California law.

So you should be very careful in imposing non-compete obligations in the U.S., especially in California.

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It is important to note that M&A is generally governed under state (not federal) law (although certain issues, such as securities law issues, are governed by federal law as well).  And, as mentioned in previous articles, each state has its own requirements, so make sure to check the actual requirements once you determine the applicable state law.  The points above are based on general corporate law principles in the United States, but different states may have different laws regarding these matters.

If you have any questions, please feel free to contact me at jsasaki@jsvlaw.com.







a. 資産買収 - 被買収会社の資産の全部又は一部を買収するものです。被買収会社自体は、買収会社とは別の会社として存続します。買収会社は取得したい資産(及び義務)のみを買収することができ、被買収会社は売却したい資産のみを売却することができます。

b. 株式買収 - 対象会社の株式の全部又は一部を、対象会社の株主から取得するものです。この場合売主は対象会社自体ではありません。買収会社は各株主と交渉しなければならないため、対象会社に株主が多数いる場合、このスキームは理想的なものではありません。このスキームでは、対象会社のどの部分を買収するかという選択はできません。被買収会社自体は、買収会社と別の会社(子会社)として存続します。

c. 合併 - 合併の場合、対象会社は買収会社の一部になり、独立の会社ではなくなります。どのような義務を買収会社が引き受けることになるか分からないため、リスクを伴います。そのため、米国では三角合併のスキーム、すなわち対象会社を買収会社の子会社と合併させるスキームが、より一般的です。対象会社と子会社は合併して同じ会社になりますが、対象会社と買収会社は別の会社のままになります。合併は対象会社の株主の一定割合(過半数など)の承認で足りることから、対象会社に多数の株主がいる場合においてよく用いられるスキームになります。

では、実際の買収のケースでどのように最適なスキームを選択するか? それは今後の記事で議論したいと思います。



a. 金銭 - 文字通り金銭ですので、説明は割愛します。

b. 株式 - 米国会社の買収において、買収会社の株式を利用することもできます。ですがその場合、米国の証券法(買収会社が日本企業であれば、日本の証券法も)を遵守する必要があり、これによって案件が複雑になる可能性があります。また、米国企業の株主を日本企業の株主になるよう説得する必要がありますが、彼らは日本企業(またその株主になること)に不慣れなため、米国企業の株式の代わりに日本企業の株式を受け入れてもらうのは難しいことも考えられます。





理論的にはそうとも言えます。ですが、米国法の一般原則により、拘束力のないLOIでも当事者に信義誠実(good faith)の義務(米国における契約全般に適用される原則として)が発生します。つまり、取引を実行するために誠実に行動する必要があるということです。取引を実行すること自体は義務づけられませんが、正当な理由なく取引を解消することはできないことになります。
















例えば、対象会社の株主であると同時に従業員でもある者との間で、その者が重要な従業員(Key Employee)であることを理由として、雇用契約中に競業禁止条項を定めた場合、当該競業禁止条項はたとえ会社の売却に付帯して結ばれたものであっても執行不能となる可能性があります。



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【参考和文作成:弁護士 林 賢治】