Imagine sitting in a conference room, surrounded by unfamiliar acronyms and terms. You might feel nervous as others seem comfortable with the jargon and process. If you’re new to mergers or acquisitions, it can feel overwhelming, as if everyone else already knows what to do.
The good news is that most M&A deals follow a similar process. When you know the main steps and what each document is for, the whole experience becomes much more manageable.
What “M&A” actually means
Simply put, M&A refers to the transfer of a company or business. Think of an equity deal like buying a house with everything in it, while an asset deal is more like picking only the furniture you want. This shows why equity and asset deals differ: each has its own legal steps, timing, contract transfers, and risk factors.
Most transactions are set up in one of two ways:
- Equity deal (stock or membership interest purchase): The buyer purchases the entity's ownership interests. The company remains the same legal entity; only the owner changes.
- Asset deal (asset purchase): The buyer purchases selected assets (and often assumes selected liabilities). The legal entity may stay with the seller, but the buyer takes the business components.
Why does deal structure matter in M&A? The structure affects the whole process and the paperwork, with each type having its own legal steps, timing, contract transfers, and risks. No single structure is always best. Each has its own pros and cons. If you’re new to M&A, knowing how structure shapes the process helps you understand which documents you’ll need and what issues to watch for.
The “typical” deal timeline
Decide on Initial Discussions and Confidentiality (NDA)
At the start, you set confidentiality rules by agreeing on a Non-Disclosure Agreement (NDA). This agreement sets clear limits on how financial and sensitive information can be shared.
Outline Letter of Intent (LOI)
Next, draft a Letter of Intent (LOI) to outline the main deal points, including structure, price, timing, and key conditions. Even if it’s not binding, it shows serious intent.
Assess in Due Diligence
This is where you decide on what needs reviewing. Assess the business across legal and operational categories to identify potential issues before proceeding.
Draft and Negotiate the Definitive Agreement
In this phase, you turn your decisions into a definitive agreement. This main contract spells out the deal details and checks each party’s commitments before the deal is finalized.
Plan for Third-party Approvals and Closing Conditions
Plan for any third-party approvals and conditions that must be met before closing. Spotting these early helps avoid delays.
Prepare for Closing
Decide the final steps concerning signatures, fund transfers, and the transfer of control. This ensures the closure goes through smoothly without unforeseen issues.
Execute Post-closing Follow-through
After closing, wrap up by handling post-closing obligations, confirming releases, and managing transitional arrangements, if any. Focus on carrying out all agreed post-deal activities.
Every deal is a bit different, but most follow the same general steps.
Step 1: Confidentiality and early information sharing
Often, the first signed document is an NDA (Non-Disclosure Agreement). It sets the rules for how information is shared, used, and protected, especially financial details, customer or vendor data, pricing, employee information, and operational details.
At this point, both sides begin to assess whether the deal is a good fit and how committed each party is. A good process doesn’t have to be dramatic—it just needs clear information and expectations.
Step 2: The Letter of Intent (LOI)
The LOI is usually a brief document that covers the main deal points, like structure, price, timing, and key conditions.
Even if an LOI says it is 'non-binding,' it still matters. Think of it like an engagement ring: it signifies serious intent but doesn't legally bind you to marriage. Similarly, the LOI sets the tone and becomes the reference point for the next phase. Many LOIs also include binding terms, such as confidentiality, exclusivity, and, in some cases, expense allocation.
If you are new to M&A, it helps to think of the LOI as a roadmap, not the final rulebook. The deIf you’re new to M&A, think of the LOI as a roadmap, not the final set of rules. The definitive agreement is the final rulebook. Reviewing the business and its legal and operational setup. The goal is not to overwhelm anyone. Instead, it is to confirm what is being purchased and to identify any issues that need to be addressed before closing, are included in the contract, or are resolved through closing conditions. As you consider this phase, ask yourself: 'Which three documents could you pull today to speed diligence tomorrow?' Being proactive in gathering key documents can help streamline the process. Consider starting with recent financial statements, key contracts, and compliance records to encourage action and effectiveness.
Common diligence categories include:
- Corporate/organizational: entity documents, ownership records, authorizations
- Contracts: key customer/vendor agreements, assignment/consent requirements, termination rights
- Real estate: leases, consents, estoppels (where relevant), property-related obligations
- Employment: key personnel, restrictive covenants, benefit plans (as applicable)
- Litigation and compliance: disputes, claims, regulatory issues
- Intellectual property: trademarks, domain names, software rights, ownership, and licensing
Who does what?
It’s important to know who does what. Attorneys handle legal diligence, while the business team and financial experts handle financial, operational, and commercial checks. Our role is to spot legal risks, gaps, and document issues.
Step 4: The definitive agreement (where the deal becomes real)
The “definitive agreement” (often called the Purchase Agreement) is the main contract that actually governs the transaction. It typically covers:
* Confirm what is being bought and sold (and what is excluded). Specify how the price is paid (and if any part is deferred). Define representations and warranties (facts about the business). Outline covenants (what each party must do before and after closing). List closing conditions (what must be true before the deal closes). Determine indemnification or remedies (what happens if statements are untrue or obligations aren’t met).
If you’re new to M&A, focus on two key ideas that come up in almost every deal: Representations and warranties are facts about the business, like contract status, compliance, authority, and asset ownership. Indemnification explains how losses are handled if those facts turn out to be wrong, within agreed limits and procedures. For example, if a seller says a product has no defects but a defect is found later and a customer claims damages, the seller could face a large indemnity claim. This shows the real financial impact of misstatements and why it’s important to understand these terms. This is a main way deals handle risk. The business team decides what risks to accept, and lawyers help put those choices into clear legal terms.
This is one of the main ways that transactions handle risk. The business team decides what risks they are willing to accept, and the lawyers help turn those decisions into clear, enforceable legal terms.
Step 5: Third-party consents and closing conditions
Many deals are delayed not by negotiation but by third parties. Common examples include:
- Landlord consents (especially in asset deals or lease assignments)
- Customer/vendor consents (if contracts restrict assignment or require notice)
- Lender/payoff documentation (payoff letters, releases, UCC terminations)
- Regulatory approvals (industry-specific)
These items should be identified early because they often drive the closing timeline.
Step 6: Closing (signatures, funds, and transfer of control)
Closing is the coordinated moment when:
1. Documents are signed.
2. Funds are wired or released.
3. Ownership or control transfers.
4. Required deliveries such as certificates, resolutions, and consents are exchanged.
Closings can be simple or require careful planning. Either way, the goal is to ensure the transfer goes smoothly and that all agreed conditions are met.
Step 7: Post-closing is real (even if the celebration is over)
After closing, there is often “cleanup” work:
- Final notices to counterparties
- transitional arrangements (if any)
- confirm releases and record filings
- handle escrow administration (if any)
- address post-closing obligations set in the agreement
This stage doesn’t always involve conflict. Most of the time, it’s just about following through on the agreed steps. what this article is not)
This article is here to help you understand the M&A process and its terms, so you can move forward with confidence. We combine your business knowledge with our legal expertise to guide the process and ensure all legal details are covered. This isn’t legal advice or a recommendation for any specific action. Every deal is different, depending on factors such as structure, location, industry, size, and your goals. While attorneys handle the legal side, business decisions—like setting value, choosing to buy or sell, and planning strategy—are up to you and your advisors, since you know your business best.
Closing thought
A well-run M&A process doesn’t have to feel chaotic. When you know the stages—NDA, LOI, diligence, definitive agreement, consents, closing, and post-closing—you can focus on making good decisions for your business, while your legal team takes care of the paperwork and legal risks.
This overview is for education only and isn’t legal advice. As attorneys, we handle the legal parts of the deal. We don’t run your business, set your deal price, or decide what’s right for you commercially. Those are business decisions, and the best results come when you and your team, with financial advisors if needed, make those choices.