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Business formation lawyers are important in the merger process

On Behalf of | Jan 30, 2019 | Business Formation

When a business merger takes place in Oregon between two companies there are certain procedures that are followed. The shareholders of each corporate entity will have to vote to approve the transaction. There may follow an elongated procedure of governmental approval and a lot of legal paper work well-suited to the expertise of business formation lawyers.

During an elongated merger process between two publicly-traded companies, controversy and negative or positive news can impact each company’s stock value. The general procedure is shown in the coming together recently of Pandora Media and Sirius XM Holdings. Pandora’s shareholders voted to approve the merger on Jan. 29 and shortly thereafter the satellite radio provider’s stock went up. Various brokers upgraded the stock from neutral to buy. Sirius is expected to put in place a protective hedge against potential market changes as a result of obtaining the streaming and video capabilities of Pandora.

If car owners begin to lose interest in satellite radio, Sirius will now be able to transfer its focus over to the streaming side of the technology. The companies confirmed that many of Pandora’s top executives will leave with the merger, including the company’s CEO. Experts point to Pandora’s prior sketchy financial performance but Sirius is in strong position to absorb any transformational bumps in the road. Sirius has that resilience due to its generation of $1.5 billion in unencumbered cash flow annually.

Therefore, Sirius will not feel any aftershocks if developing Pandora’s profitability takes some twists and turns. Of course, there are many mergers and acquisitions that occur each year among smaller companies here in Oregon and in other states. When two companies begin to pay serious attention to making a move, the input and guidance of attorneys who focus on business formation is an indispensable need in producing a successful transition. A company’s management will also be secure in knowing that all of the legal bases have been covered to place the transaction on solid ground going forward.