Business mergers in Maryland

Merger deals can be governed by both state and federal regulations.

A recent article in The New York Times notes that 2015 was a record year for mergers and acquisitions. Over $4.7 trillion was generated in announced deals. Although larger transactions generate the most attention, many small businesses merge to enable the new entity to compete more efficiently in the marketplace.

Mergers defined

Mergers are legal tools that allow businesses to expand their reach or fill a gap in their current operating structure. The term is defined by Black’s Law Dictionary as the fusion or absorption of one thing into another. This generally entails a smaller business being absorbed by another, where the less important "ceases to have an independent existence" or a merger of equals and a new name and identity is established.

Merger law in Maryland

Mergers of Maryland entities are governed by Maryland law. The Office of the Attorney General and the Department of Business and Economic Development for Maryland note that Maryland laws are "flexible and serve well those businesses that have chosen to establish operations in" the state. Maryland law allows domestic business entities to convert or merge with foreign or domestic business entities "of similar or different organizational structure." It also allows for foreign entities to convert or merge with business entities organized under Maryland law. Although the law is described as "flexible," there are various regulations that need to be followed when making these deals.

One example involves deals between corporations and associations. When going through a merger in the state, these entities are required to submit the proposed transaction for consideration at an annual or special meeting of stockholders and have the board of directors of each corporation adopt a resolution that declares that the transaction proposed in the resolution is advisable.

Importance of legal counsel

There are many regulations that can apply to a merger deal. Although state law plays a role, additional federal regulations can apply. As a result, it is wise to seek the counsel of an experienced mergers and acquisitions lawyer in order to better ensure that your business interests are protected and that your business is in compliance with these regulations.