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Tampa Business & Commercial Law Blog

5 different types of company mergers

When one or more businesses combine their assets in Florida, this combination is referred to as a company merger. A company merger may be described as one of five different common merger types. Determining what kind of merger is taking place will depend on the relationship between the companies that are merging and the purpose for the merger.

Two of the most common kinds of mergers are conglomerate mergers and horizontal mergers. A conglomerate merger is a merger between two different companies that offer different goods or services and compete in different markets. A horizontal merger, on the other hand, is a merger between two companies that offer the same good or service in the same market. Another kind of merger, called a market extension merger, takes place when two companies that previously sold the same good or service in different markets decide to merge.

Defending against a hostile takeover

Business owners in Florida may benefit from learning more about some of the issues related to hostile acquisitions. Companies that are targeted typically employ a variety of defenses in attempts to ward off potential bidders. The hostile acquisition is described as an organization attempting to take over another by means other than a direct purchase. Regulatory agencies and the target company's shareholders may attempt to prevent the takeover by entangling the bidder in litigation.

The typical goal of a target's defense strategies is to make the acquisition less appealing to the takeover company, reduce the targeted company's value or to provide the targeted company with more time to prevent the takeover. Opposing parties typically cite securities, antitrust or financial violations. Greenmail is one common strategy, described as purchasing shares from the hostile bidder for a price exceeding market value.

What is the role of the trustee in a Chapter 11 bankruptcy?

In a Chapter 11 reorganization case filed by a Florida company, the bankruptcy trustee plays a prominent role. He or she is responsible for monitoring the debtor's operation of the business and to make certain the debtor submits all required quarterly reports and fees regarding the business as required to the bankruptcy court.

The U.S. trustee conducts a section 341 meeting, also known as a creditors's meeting. At the creditors's meeting, both the creditors and the trustee can question the debtor in possession under oath about the debtor's conduct, acts, property and how the case is being administered. The debtor in possession will also be required to pay quarterly fees ranging from $300 to $30,000 to the trustee depending on the monthly receipts of the business during the period.

What is the role of a creditors' committee in Chapter 11?

A Florida business going through Chapter 11 bankruptcy has the opportunity to reorganize company operations in order to improve its chances of surviving tough economic times. However, creditors have an interest in the activities of a business owner during the reorganization process. Creditors who may be paid less than what is owed are able to participate in a ballot process to vote on a reorganization plan. A creditors' committee is typically composed of the seven creditors with the largest unsecured claims pending against the company filing for Chapter 11. The bankruptcy trustee appoints the committee.

The responsibilities of the creditors' committee relate to oversight of business operations and administration of the business bankruptcy. The committee may consult with the debtor about the case's administration. Additionally, the committee may evaluate conduct issues and business operations to ensure that the debtor in possession is acting responsibly. The committee also helps during the development of the repayment plan for the debtor. If necessary, a creditors' committee might hire a lawyer to assist with these responsibilities. The goal in positioning this group is to promote appropriate actions on the part of the debtor.

Understanding Chapter 11 bankruptcy

Homeowners and business owners may benefit from understanding more about the description of Chapter 11 bankruptcy provided by the U.S. Courts. The courts refer to this type of bankruptcy as reorganization. Debtors are permitted to propose a plan of reorganization for an opportunity to retain the assets and repay creditors over a period. Although reorganization is an instrumental part of the process, there are also heavy stipulations that the debtor in possession is required to abide by.

The stipulations are designed to provide adequate protection for creditors. Debtors in possession are permitted to lease, sell or use property of the estate within the scope of conducting normal business. Debtors are required to receive permission from court before using the assets in activities that are beyond the scope of conducting ordinary business. In addition, debtors in possession are prohibited from freely using items described by the U.S. Courts as "cash collateral."

Providing services during mergers and acquisitions

Florida businesses that are financially distressed or currently considering mergers or acquisitions may benefit from consulting with our firm. Mergers and acquisitions are often cumbersome and may pose unnecessary risk to all parties involved when they are managed improperly. Our lawyers can help ensure that safeguarding the business's interests remains a top priority in all transactions. Legal counsel may work to develop solutions and strategies that maximize the benefits we might provide for your business, and we have experience assisting businesses in all phases of mergers and acquisitions.

Our firm has represented buyers and sellers participating in many different types of transactions. Our proficiency in insolvency, corporate bankruptcy, business law and various business operations enables us to provide legal assistance in a varying array of complex situations. We cater our legal advice to coincide with your organizational priorities or limitations. Aside from bankruptcy, we can also provide guidance to businesses in completing initiatives for corporate restructuring.

How does Chapter 11 work?

A business dealing with financial difficulties that may affect the ability to pay creditors and continue operation might seek relief through Chapter 11 bankruptcy. This may provide the opportunity to regain a stable financial footing. Chapter 11 is most commonly used for the reorganization of a business although certain individuals qualify as well. In the case of a business, this form of bankruptcy may be used by corporations, partnerships and limited liability companies.

As in other types of bankruptcy, Chapter 11 is initiated with a petition that is filed with the bankruptcy court. This type of debt reorganization can begin voluntarily, but it can also be initiated under certain conditions by creditors. At the same time the petition is filed, a debtor is expected to provide schedules of income and expenditures, schedules of liabilities and assets, and information about contracts and leases that are still active. As well, a statement must be provided that details current financial affairs for the organization. Filing fees and other administrative costs are assessed and must be paid at the time the bankruptcy petition is filed.

Understanding the eBay-PayPal split

Some investors in Florida could be affected by the recent eBay-PayPal split and indications of a potential mobile payment merger in the future. EBay recently announced plans to divest PayPal during the second half of 2015. Leading investors claim PayPal could benefit from acquiring smaller rivals or merging with a larger mobile payment enterprise. An independent PayPal is expected to be more enticing to larger competitors, like Amazon.com. Being independent may also allow PayPal to better compete with newer mobile payment services like Apple Pay.

PayPal currently handles almost 17 percent of the money spent online. The mobile payment service collects fees from more than 150 million users and processes payments for goods and services in over 200 different markets. PayPal reported revenue of $1.95 billion during the second quarter of 2014, realizing a growth rate of 20 percent. PayPal accounted for almost 50 percent of eBay's total revenue, and is expected to process 1 billion mobile payments by the end of 2014.

Florida financial services firm continues to grow

Florida-based Ladenburg Thalmann Financial Services announced in September that it had agreed to purchase Securities Services Network. Once the deal is finalized, the Tennessee broker-dealer company will become Ladenburg Thalmann's third recent acquisition. The company acquired similar businesses based in Alabama and Washington in August.

According to reports, Ladenburg Thalmann will pay for SSN with a combination of $25 million in cash and $20 million in four-year notes. The figures are in line with the company's previous acquisitions of $42 million and $24 million. The move is expected to bolster Ladenburg Thalmann's annual revenue by approximately $115 million while adding $13 billion in client assets and 450 independent financial advisers to the books. The deal is expected to be concluded by early 2015, and the current chief executive officer of SSN is expected to remain with the company.

Microsoft acquires Minecraft gaming company for $2.5 billion

Florida families may be familiar with the indie game Minecraft, produced by Mojang, a Swedish company. However, they may be surprised at the price tag associated with a recent acquisition of both Mojang and its games. Microsoft has spent $2.5 billion to acquire the popular kids' video game. Minecraft has sold in excess of 54 million units for a variety of platforms.

The new CEO of Microsoft indicates that the Minecraft franchise has a vibrant community and offers a wealth of opportunities in an area that can span numerous devices and involve billions of hours of activity time on an annual basis. Other Microsoft officials indicate that there is a commitment to maintain the community features available to those who play Minecraft. The founders of Majong will be exiting the organization upon completion of the acquisition.

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