What Is An Amalgamation Agreement?
Amalgamation is a process of merging the two companies into one entity that works in similar goals so they can expand their horizons. By doing this, creating the amalgamation agreement template is a must for a more professional structured.
How Do You Make An Amalgamation Agreement?
We provide you amalgamation examples to ease you learn about the structure of this agreement. This is crucial to understand before agreeing so you can avoid mistakes and prevent future dispute due to some ambiguity. Furthermore, you need to follow some steps below:
- Definitions – You have to include some terms for references so the other parties will not get confused reading the agreement. Many terms need clear explanations such as board, agreement, parties, register, etc. These terms should be explained clearly and related to the parties who sign the agreement.
- Previous yeas financials – Bother parties should consider the financial records so you both can figure out about the target shortly. At least, the financial history should be checked is the last 3 years. This will reveal the real condition of the company.
- Intellectual properties – This is about the domestic patents and the exclusive technology that should be paid attention by both parties. Because this is about the authorization of intellectual properties that will be used by both of them.
- The value of undertaking – This includes the stocks debts, securities and others that should be evaluated by each company. This should be mentioned to the agreement wither he will be the consent of the parties regarding the assets and liabilities move.
- Effective date – This is about the effective date of the amalgamation.
- Legal proceedings – This talks about the lawsuits, pending dues or proceeding that against the transferor will be continued to law.
What Are The Objective of Amalgamation
Of course, there are some purposes why two companies do amalgamation which are:
- To avoid competition – with the same goals and most industries, amalgamation is purposed to avoid competition and allow each company to reach further.
- To reduce cost – Another benefit of doing this procedure is to reduce eh cost. This is possible because both companies can work together pressing the cost of production while allowing them fulfilling the market’s needs.
- To gain more profit – This is not a secret anymore if two companies are becoming one entity. This can be in the form of tax and also higher credit.
- To achieve growth – It is purposed to facilitate internal growth and also prevent the new competitor.
Are Amalgamation and Merger Different?
Amalgamation is a process or consolidating two or more companies with a similar types of business. Meanwhile, the merger is not the same files. This can be two or more companies with different fields. The companies that are consolidated in one company can result in new company or existing one. In short, a merger is grouping multiple businesses in one entity.
Sample Amalgamation Agreement Template