Corporate advisory attorney, what types of documents are prepared in an M&A?

Hello. This is a corporate advisory attorney at Daeryun Law LLC. You have asked about the documents prepared during an M&A.

An M&A proceeds over several months or more through negotiations among various stakeholders, and since various documents are prepared, you must understand the purpose and content of these documents in order to facilitate a smooth process.

I will explain, one by one, the representative documents prepared in an M&A.

▶ NDA (Non-Disclosure Agreement)

Simply put, an NDA refers to an agreement concluded, by setting the scope and timing of the disclosure of business secrets or important information exchanged during the transaction process, to prevent the leakage of information.

▶ Teaser (company introduction materials), IM (Investment Memorandum)

These are materials containing an explanation of the company to be sold.

A Teaser provides a rough introduction to the company without revealing the company's name, whereas an IM can be regarded as materials that set out in detail the company's name, its characteristics, and its situation.

Usually, an IM is provided after an NDA has been concluded.

▶ LOI (Letter of Intent)

This is a document by which the buyer formally expresses to the seller their intention to purchase, when they have such an intention.

It is used as a basic document to prepare for the negotiation stage by specifying matters such as the acquisition conditions, the price, and the scope of due diligence.

▶ MOU (Memorandum of Understanding)

This is a document that records the tentatively agreed content before the main contract is concluded.

It is not clearly distinguished from an LOI, so if an LOI has been prepared, the preparation of an MOU is sometimes omitted.

▶ Term sheet (contract conditions)

This is a document summarizing the basic matters of the contract conditions before the main contract.

▶ SPA (Stock Purchase Agreement)

This is the document that constitutes the main contract of the M&A.

It includes key provisions such as the stock purchase price, the representations and warranties of the seller and buyer, covenants, and damages.

▶ SHA (Shareholders' Agreement)

This is a document that specifies the sale and purchase agreement with the shareholders who own equity in the company.

The content regarding the rights and obligations among shareholders, such as the sale conditions, the price, and the payment method, must be set out in detail.

Since such an M&A involves diverse types of documents, and complex content, it must be prepared even more carefully.

In order to prevent legal risks and pursue a stable M&A, you may wish to prepare with the assistance of a corporate advisory attorney.