Core Viewpoint - The design of M&A structures in the Nasdaq market must balance U.S. capital market rules, tax efficiency, shareholder protection, regulatory requirements, and strategic goals while addressing the unique challenges of cross-border transactions [2]. Group 1: Strategic Alignment - The design of the transaction structure should start from the acquirer's strategic intent, such as industry consolidation, financial investment, or technology/IP acquisition [2]. - For industry consolidation, horizontal or vertical mergers should be chosen to quickly integrate businesses and retain the target company's core assets [2]. - Financial investments may involve minority equity acquisitions or convertible bonds for short-term gains [2]. - When acquiring technology or IP, stock or asset acquisitions are preferred to avoid assuming the target company's hidden liabilities [2][3]. Group 2: Legal Structure - The core legal structures for Nasdaq M&A are stock acquisition and asset acquisition, each with significant differences in liability, tax treatment, and processes [4]. - Stock acquisition involves purchasing a majority of the target company's shares, directly obtaining its assets and liabilities [5]. - Advantages of stock acquisition include simpler processes and the ability to inherit contracts and licenses, with potential tax deferral benefits [5]. - Asset acquisition allows for liability isolation, enabling the acquirer to select quality assets while avoiding historical debts [7][8]. Group 3: Payment Methods - Payment methods in Nasdaq M&A include cash, stock, or a combination, balancing cash flow pressures, shareholder valuation preferences, and stock price volatility risks [11]. - Cash payments provide immediate liquidity to target shareholders but require significant financing, increasing financial leverage [12][13]. - Stock payments reduce cash pressure but expose target shareholders to stock price fluctuations and dilute the acquirer's equity [14][15]. - Mixed payments balance risks for both parties, allowing for a predetermined ratio of cash and stock [16][17]. Group 4: Tax Optimization - U.S. tax law significantly impacts M&A tax treatment, aiming to minimize tax burdens for both parties [20]. - Stock acquisitions can qualify for tax-deferred treatment under IRC §368, allowing shareholders to defer capital gains taxes [20]. - Asset acquisitions can utilize §338(h)(10) elections to treat the transaction as a "deemed stock acquisition," providing tax benefits [22][23]. - Cross-border transactions require consideration of withholding taxes and compliance with transfer pricing rules [24][25]. Group 5: Information Disclosure and Shareholder Protection - Nasdaq imposes strict information disclosure and shareholder rights requirements in M&A transactions [26]. - Key documents include letters of intent, stock purchase agreements, and proxy statements, which must disclose critical terms and fairness analyses [26]. - Shareholder protection mechanisms include appraisal rights, golden parachutes, and poison pill strategies to prevent hostile takeovers [27]. Group 6: Regulatory Approval - Nasdaq M&A transactions require approval from federal and state regulatory agencies, focusing on antitrust and industry-specific regulations [28]. - Antitrust reviews by the FTC and DOJ assess whether mergers reduce market competition, with specific thresholds triggering detailed scrutiny [28]. - Industry-specific approvals are necessary for sectors like finance, healthcare, and technology, ensuring compliance with relevant regulations [29][30]. Group 7: Integration Support - The transaction structure should facilitate post-merger integration to ensure the realization of synergies [31]. - Retaining operational entities and designing debt structures are crucial for maintaining cash flow and avoiding defaults [31]. - Clear delineation of IP ownership is essential for technology acquisitions to support global strategies [31].