In the event of a merger, two companies form a legal entity, with the shareholders of the target company receiving shares from the purchaser, cash or a combination of the two. The surviving entity supports all assets, rights and liabilities of the company extinguished by application of the law. Mergers are often structured as “triangular,” with the buyer using a subsidiary (usually a new entity) merged into the target entity (an inverted triangular merger) or in which the target entity merges (a triangular merger at the front). One of the advantages of the triangular structure of the merger is that the buyer can protect himself against the debts of the target entity. The oil and gas industry does not distinguish between an asset and the purchase of shares when it designates its corresponding sales contract. In this sector, whether it is the purchase of assets or shares, the final agreement is called the Purchase and Sale Contract (PSA). In addition to the flexibility to sell only certain assets and not the entire business, asset acquisition agreements generally contain detailed provisions regarding the transfer of liabilities from the seller. When a company is made up of several shareholders, there is usually a shareholder contract. These agreements define the rights and obligations of shareholders. In most cases, they contain certain rights related to the departure of a shareholder. If this is the case, lawyers must take these rights into account in the share purchase agreement of the transaction. In another example, a GSB is often required in a transaction in which one company buys another.
Because the G.S.O. defines the exact nature of what is purchased and sold, the agreement may allow a company to sell its tangible assets to a buyer without selling the naming rights attached to the transaction. Nevertheless, there are a number of essential elements that contain each spa: in the event of a share acquisition transaction, the shareholders of the target company participate in the transaction and they must approve the sale process, which can thwart or delay the transaction if there is no agreement with the required majority among the shareholder.