Q1 (M&A Structures)

M&A exits have increased recently. What kind of M&A structures are there? And what are their advantages and disadvantages?

Broadly speaking, the different structures for M&A are (1) share purchase, (2) business (asset) transfer, (3) merger, (4) share exchange (kabushiki koukan), (5) share transfer (kabushiki iten), and (6) corporate split (kaisha bunkatsu). (A change of control can also be effected by a new share issuance.) These structures can also be combined. As for which structure to choose, you have to weigh the advantages and disadvantages of each structure, after consulting with specialists, such as lawyers, tax advisor (zeirishi) and accountants. From a legal perspective, the main points to consider are (i) whether you will succeed to the business yourself or whether you will control it through a subsidiary, (ii) whether you will succeed to the entire business, including all liabilities, or whether you will succeed to only a portion of the rights and obligations, and (iii) whether you intend to succeed to the entire business without obtaining the consent of each party, or whether you will obtain consents from individual parties.

(Posted: January 27, 2012)