Legal And Ethical Issues Of Mergers And Mergers - 1085 Words

Hostile takeovers are no longer common as they were in the 1980s. However, legal and ethical issues still surround mergers and takeovers (Thomas, 2009). This document examines and identifies legal and ethical issues which the merging parties should consider before, during and after a merger. The document will also look at measures of managing these legal and ethical issues. Pikula (1999) observes that in merging two or more entities, the management of the companies must adhere to the Sherman Anti-trust Act which was established in 1890. This act was specifically established to prevent mergers from creating monopolies and cartels with an aim to exploit the consumers through determining prevailing market prices. If the merger results in a monopoly, it won’t be approved by the government. Employee contractual agreements must be considered before, during and after mergers. For the merger to go on seamlessly there should be shareholder approval. Initial approval by shareholders for the companies to consolidate their operations helps prevent conflicts from shareholders after the merger. Lastly, regulatory approval should be considered. The management must register the newly formed company. In addition, managers from the merging parties must consider agreements and contracts that the parties are engaging in as these will be transferred to the new company upon the merger. According to Pikula (1999), one of the companies involved in the merger may hide various issues within itsShow MoreRelatedEthical And Legal Issues With Mergers And Acquisitions1539 Words   |  7 PagesEthical and Legal Issues with Mergers and Acquisitions The legal and ethical issues that should be considered before merger would be composing the team after the merger, pre-selection and selection of persons, and conducting full due diligence. 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