M&A Ready 2025: A beginners guide
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The 2025 M&A market is set for significant activity, fueled by strategic growth initiatives and favorable market conditions. “We expect the M&A landscape to re-warm in 2025 and beyond”
If you’re considering selling your business or merging, M&A can be a challenging process. With proper preparation and experienced legal counsel’s support, you can mitigate risks and ensure a successful outcome.
The Phases of M&A
Letter of Intent (LOI)
The LOI is the foundation of your deal, establishing expectations on key commercial terms like price, structure (cash, stock, or a mix), and exclusivity. A vague or incomplete LOI can lead to drawn-out negotiations, increased legal costs, and deal fatigue. Precision is key—clearly define earn-out structures, working capital adjustments, and post-closing obligations from the outset. Address the difficult conversations around some of the most relevant issues early on, such as management retention, indemnification caps, and labor matters. If there’s a potential deal-breaker, address it now rather than during the purchase agreement stage. A well-structured LOI streamlines the process to closing, minimizes risk, and enhances negotiating leverage.
Due Diligence
Buyers will scrutinize everything. Missing financial records, missing legal documents or not properly executed contracts, compliance issues (especially on labor matters), or weak governance can kill a deal or significantly affect your valuation. In Latin America, strong corporate governance is a must—clean financials, solid contracts, and clear shareholder structures. If you don’t manage your risks, the buyer will—by lowering the price, tightening terms, or walking away. Conduct a proactive internal review in advance to identify and fix red flags before they do.
Definitive Agreements
The Stock Purchase Agreement (SPA) and final documents lock in every detail of the transaction—price adjustments, indemnities, escrow terms, non-compete, and liability. Bring in legal counsel early on, not just for compliance, but to secure better terms. If your deal is governed by New York law, get a New York lawyer who knows how deals are really done there and what the market practice is.
Pro Tip: Don’t just hire a lawyer—hire a dealmaker. Your legal team should structure terms to protect your upside and limit risk, not just “paper the deal.” A sharp lawyer can negotiate lower indemnity caps, smaller escrow holdbacks, and earn-out terms that actually work in your favor. A seasoned lawyer can break down the pros and cons of the terms the buyer claims are their best offer.
Do Be Due Diligence Ready
Preparation minimizes risks and delays. Here’s how:
- Corporate Records: Update/review articles, bylaws, cap tables, shareholders agreement, ESOP, and corporate books. Is your company in good standing? Does it have the requisite registrations to operate in each jurisdiction? Did all the parties sign the shareholders agreement?
- Financials: Audited financials and tax filings are critical. Meet with your advisors to understand these documents and the structure behind them.
- IP Security: Ensure all intellectual property is owned by the company, everybody involved with the company (employees, contractors etc) should enter standard CIIA (confidential information and invention assignment agreements). Have you protected all IP? Do you have the legal rights to all IP in use? Is there any threatened litigation? Are you using open source software? Are the licenses you are using transferable?
- Contract Review: Collect all key contracts, flagging clauses that might impact the deal, such as change-of-control provisions. Labor law compliance is critical in LAC. Understand the impact of your proposed transaction with any ESOP in place.
Pro Tip: Organize everything in a digital data room aligned with your due diligence checklist. Talk to your M&A Lawyer at the get go.
Broker or No Broker?
It’s not just about cost—it’s about leverage, access, and execution.
Use a Broker If: Do you want competitive bids or access to strategic buyers? A strong broker may help you expand your reach and have more bids.
Go Solo If: Do you have direct buyer relationships? Do you understand deal structuring? Can you manage negotiations? Your answers to these questions would tell you if skipping broker fees might make sense, but in any case you need to have the right legal and financial team
Pro Tip: Not all brokers add value. Vet them like a key hire. Check past deals, avoid long-term lock-ins, and tie success fees to real performance, not just closing. Do your research! No evergreen clauses. Review your broker agreement with your lawyer.
The SPA: A Quick Overview
The SPA locks in terms, risk allocation, and post-closing obligations. Every word matters.
- Reps & Warranties: Buyers will demand broad assurances. Push back on overreach and limit exposure—precise wording prevents post-sale liability headaches. Market practice and industry specific considerations are very important.
- Indemnification: This determines whether you keep your upside or bleed cash post-closing. Cap liabilities, shorten survival periods, and limit escrow holdbacks.
- Closing Conditions & Adjustments: Ensure price adjustments (working capital, earn-outs) follow clear formulas, not vague discretion. Ambiguity favors the buyer. Work with your accounting team to run different scenarios, understanding tax implications too.
Pro Tip: A strong M&A lawyer doesn’t just “review” the SPA—they shape it to your advantage. Market knowledge, not just legal expertise, can mean millions saved—or lost—after closing.
Non-Compete Obligations
Non-Competes: Protecting Buyers, Not Trapping Sellers
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