Eric kiplagat

BBIT/MG/1477/09/19

FORMS OF MERGERS AND ACQUISITIONS

Some of the most commonly used forms are explained below.

1. SALE OF SHARES

Is when a large part of all companies have transferred their activities in a private limited
company or a public limited company. One of the advantages of transferring the business to a
private or public limited company is that, through the sale of the shares, the legal and economic
ownership of the business (read: company) is transferred. The most basic form is when the seller
who holds 100 percent of the shares negotiates with a (prospective) buyer and that a purchase
agreement is concluded in which the shares are sold to the new owner.

2. ASSETS TRANSACTION
An alternative to the sale of shares is the transaction of assets. In an asset transaction, the shares
of the company are not sold. Instead, “only” certain goods or activities are sold. The purchase
agreement, which provides a description of the goods sold, is often a more extensive document,
because it specifies exactly what is being sold and what rights and obligations are or are not
attached to it. This purchase agreement will describe which goods and/or activities are the
subject of the sale. Examples include machinery, the customer database, orders, stock, etc.,.

3. LEGAL MERGER OR SPLIT-OFF

If two or more parties wish to continue as a single legal entity, they may decide to legally merge.
This, for example, can be achieved by establishing a legal entity in which the two merging
parties will unite.