M&A and Restructurings

In a "fusão" (merger), two or more companies are dissolved and combine to form a new legal entity (Law 6.404/1976, art. 228); in an acquisition, the buyer acquires an equity stake in the target company, which continues to exist. The practical difference lies in who assumes the liabilities: in a merger, the new entity absorbs everything from both companies; in an acquisition, the target company's liabilities remain with it. For SMEs, the acquisition of "quotas" (equity units in a limited liability company) or shares is the most common structure because it preserves contracts, licenses, and permits that might otherwise require third-party consent in a merger or "incorporação" (statutory merger by absorption).Ler artigo completo

An earn-out is a clause that splits the purchase price into a fixed portion paid at closing and a future variable portion, contingent on the company's performance after the sale. It's used when the buyer and seller have different expectations about future performance. In startups, it comes up when revenue is concentrated among a few clients or depends on contracts that haven't yet been renewed. The risk for the seller is that the buyer may make decisions after closing that undermine the earn-out metric — which is why the contract must define the metric precisely and include protections against interference.Ler artigo completo

The seller's main protections are: exclusivity in the LOI (Letter of Intent, preventing the buyer from negotiating with other targets), well-defined conditions precedent, a cap and statute-of-limitations period for representations and warranties, an independent dispute resolution mechanism for post-closing price adjustments, and non-compete clauses with a reasonable scope. The SPA should include a long-stop date after which either party may withdraw without penalty. Each protection reflects a negotiation over risk allocation — experienced buyers typically arrive with drafts favorable to themselves.