Before Consulting a Lawyer on Business Mergers or Acquisitions
Good preparation improves negotiation leverage, reduces timelines, and helps your lawyer protect your interests. This guide explains practical steps to take before your first meeting, with Nigeria focused notes and tips applicable internationally where useful.
Introduction: Why Preparation Matters
Mergers and acquisitions involve significant legal, financial, tax, employment, and regulatory considerations. Whether you plan to buy or sell shares, acquire assets, or combine entities, early preparation reduces surprises and prevents costly missteps. In Nigeria, transactions may require attention to corporate filings, competition clearance, sector approvals, labor law obligations, intellectual property protection, and careful tax planning. Enter your consultation with clarity on objectives and a clean set of documents so your lawyer can immediately evaluate risks and structure options.
Steps You Can Take Before Seeing a Lawyer
- Clarify objectives: growth, market entry, consolidation, technology acquisition, vertical integration, or exit. Define success metrics like market share, profitability, or synergies.
- Sketch preferred deal structure: share purchase, asset purchase, merger, or joint venture. Note why the structure suits your goals and risk appetite.
- Map key stakeholders: board, shareholders, lenders, major customers, unions, and regulators. Identify where preliminary consent in principle is needed.
- Run preliminary financial sense checks: review high level financials, debt schedules, tax exposure, and any red flags in revenue quality.
- List critical dependencies: change of control clauses, landlord consents, bank consents, key supplier or client approvals, licensing renewals.
- Prepare a risk register: litigation, regulatory actions, environmental liabilities, data protection risks, cybersecurity incidents, compliance gaps.
- Create a basic integration plan: leadership structure, staff retention, culture alignment, systems migration, brand and customer communications.
- Protect confidentiality: put a simple mutual non disclosure agreement in place before sharing sensitive data.
- Assemble a secure data room: organize all corporate, financial, tax, HR, IP, and contract documents in a folder structure with controlled access.
- Draft your questions for counsel: deal structure options, liabilities to watch, filings and approvals, timeline and closing steps, indicative costs.
Evidence and Documents to Gather
Provide clean and current records. Accurate documentation speeds legal review and reduces back and forth.
- Corporate and ownership: CAC incorporation documents, updated status report, register of members, share certificates, shareholder agreements, board and shareholder resolutions, constitutional documents.
- Financial and tax: audited accounts for the last 3 years, management accounts, cash flow statements, debt schedules, bank letters, tax clearance certificates, VAT and withholding records, open tax queries or assessments.
- Material contracts: supplier and customer agreements, distribution or franchise agreements, exclusivity clauses, change of control triggers, leases, loan and security documents, guarantees and comfort letters.
- Regulatory and sector approvals: licenses, permits, and correspondence with regulators. Note where competition or sector approvals will be required.
- Employment and pensions: employee list, contracts, compensation and benefits, pensions compliance, outstanding disputes, redundancy or severance exposure.
- Intellectual property and IT: trademarks, patents, copyrights, domain registrations, software licenses, service level agreements, cybersecurity and data protection policies, breach logs.
- Litigation and disputes: list of pending and threatened claims, judgments, settlement agreements, regulatory investigations, compliance undertakings.
- Assets and real estate: asset register, serial numbers, title documents, perfection status, encumbrances, insurance coverage and claims history.
- ESG and safety: environmental audits, health and safety records, community and stakeholder commitments that may bind the business.
Common Mistakes Clients Make
- Proceeding without a signed NDA and sharing sensitive trade secrets too early.
- Ignoring competition and sector approvals that can delay or invalidate a closing.
- Assuming liabilities will not follow the business irrespective of structure. Liability allocation depends on the chosen structure and negotiated terms.
- Overlooking change of control clauses that can terminate key contracts or trigger consent needs.
- Underestimating integration workstreams like systems, culture, and customer communications.
- Relying on verbal assurances instead of documented warranties, indemnities, and conditions precedent.
Common Misconceptions
- Lawyers will unearth everything automatically: counsel works with what is disclosed and available. Your organized files and candid brief matter.
- All deals require the same approvals: thresholds and sector rules differ. Early mapping prevents surprises.
- Price is fixed at heads of terms: purchase price can be adjusted after due diligence through completion accounts or earn outs.
- M&A is only for large corporations: small and medium businesses use acquisitions and mergers for growth, survival, or succession.
Preparing for the Consultation
Bring a concise summary and a clean folder of documents. If you are the seller, prepare a 2 page overview. If you are the buyer, prepare a one page thesis explaining why the target is attractive and where key risks may lie.
Checklist: what to organize
- Deal objective summary and success metrics.
- Preferred structure and reasons.
- Stakeholder map and status of internal approvals in principle.
- Top 5 value drivers and top 5 risks you see.
- Initial data room link or folder index.
- Timeline expectations and any hard deadlines.
Questions to ask your lawyer
- Which structure best limits unwanted liabilities while meeting objectives.
- Which filings, approvals, or notifications apply and in what sequence.
- What warranties, indemnities, escrow, or price adjustment mechanisms are advisable.
- How long a realistic timeline looks given the approvals and due diligence scope.
- How to design an integration plan that preserves value and avoids disruption.
Practical Insights and Nigeria Context
Structure choice in practice
Share purchase: quicker transfer of control and continuity with customers and staff, but liabilities remain inside the company unless carved out. Asset purchase: cherry pick assets and leave unwanted liabilities subject to negotiation, but requires individual assignments and consents and may be slower where many contracts exist. Merger or amalgamation: useful for combining entities and streamlining operations. Joint venture: for phased collaboration where a full acquisition is premature.
Valuation and price protection
Use completion accounts or locked box mechanics to protect value. Consider earn out for alignment where future performance is uncertain. Use escrow or holdback for known risk items.
People and culture
Retention bonuses, clear role definitions, and early internal communications reduce anxiety. Treat staff fairly and document transfers or re engagement in an asset deal.
Technology and data
Inventory systems, integrations, licenses, and security posture. Confirm vendor change of control policies. Verify data protection compliance and incident history.
Frequently Asked Questions
Do all Nigerian deals need competition approval
No. Notification depends on thresholds and potential competitive effect. Many transactions still require notification or clearance. Your lawyer will map this early.
What is the difference between share and asset purchase
Share purchase transfers the company as a whole along with assets and liabilities subject to negotiated protections. Asset purchase transfers selected assets and contracts by assignment and may leave some liabilities behind based on terms and law.
How long will an M and A deal take
Simple transactions may close in 8 to 12 weeks. Complex or regulated deals can take several months due to due diligence, consents, and approvals.
Will employees automatically move to the buyer
In a share acquisition the employer entity remains the same, so employees generally continue. In an asset acquisition employees may need new contracts or transfers subject to agreed terms.
Can foreign investors acquire Nigerian businesses
Yes subject to investment registrations and sector limits. Sector regulators and immigration rules may apply.
Final Thoughts
M&A success rides on preparation. Define objectives, protect confidentiality, assemble clean records, and anticipate approvals. Enter your consultation with clarity so your lawyer can design a structure that protects you, allocates risks sensibly, and sets a credible path to closing and integration.
Next Step
Talk to an M and A Lawyer at 1st Attorneys