Michigan Business Mergers & Acquisitions

For business owners in Northern Michigan, mergers and acquisitions (M&A) can represent exciting opportunities to grow, transition, or redefine a business. But they also introduce layers of legal complexity that, if overlooked, can derail a transaction or leave the parties exposed to serious liabilities. Whether you’re acquiring a competitor, preparing for succession, or joining forces with a strategic partner, a firm understanding of M&A legalities is essential to getting the deal done right.

This guide walks you through the key legal concepts, decision points, and risks you need to manage during any business acquisition or merger—especially in the unique business environment of Michigan.

Laying the Legal Groundwork

M&A transactions are typically governed by both state and federal law. In Michigan, the Business Corporation Act sets out procedures for mergers and acquisitions, including what level of shareholder and board approval is required. Once a transaction is approved internally, companies must file certificates of merger with the Michigan Department of Licensing and Regulatory Affairs (LARA) to formally complete the deal.

Federal law enters the picture when deals are large or publicly traded companies are involved. The Hart-Scott-Rodino Antitrust Improvements Act requires certain mergers to be reported to the Federal Trade Commission (FTC) and Department of Justice (DOJ), triggering a mandatory waiting period and potential antitrust review. In addition, the Securities Act of 1933 and the Securities Exchange Act of 1934 impose disclosure obligations on public companies and investor-driven entities.

In short, even transactions between closely held businesses in Michigan can be subject to complex layers of oversight. Having a local legal team that understands how state and federal law intersect is critical to avoiding costly missteps.

Choosing the Right Structure and Understanding Tax Implications

How you structure your deal will have wide-reaching consequences, from liability exposure to tax treatment. Asset purchases allow the buyer to select only certain assets and liabilities to acquire, minimizing exposure to unknown obligations. However, this structure can involve additional complexity, especially when transferring contracts that require third-party consent.

Stock purchases, on the other hand, involve acquiring the entire legal entity—including all its assets, debts, and legal risks. These deals are often easier to execute procedurally but can carry more hidden baggage.

Tax planning is also central to structuring a deal properly. Certain transactions may qualify as tax-deferred reorganizations under the Internal Revenue Code, but only if they meet specific legal standards. Michigan tax law can further influence how items like sales tax, asset depreciation, and payroll taxes are treated. A deal that looks straightforward on paper may have drastically different consequences depending on how it is structured, and a skilled legal and tax team should evaluate those implications early.

Due Diligence: A Non-Negotiable Phase

No M&A transaction should proceed without careful legal and financial due diligence. This is the buyer’s opportunity to uncover hidden risks and liabilities, confirm the accuracy of representations, and negotiate protections before closing.

To make this process manageable and comprehensive, we guide our clients through a five-part due diligence framework:

1. Legal Review – We examine governance documents, corporate filings, licenses, and pending litigation.
2. Contracts and Agreements – We assess customer, supplier, and vendor agreements for transferability, risks, or change-of-control triggers.
3. Intellectual Property – We audit the company’s IP portfolio, confirm ownership, and flag any disputes or licensing restrictions.
4. Employment Matters – We evaluate wage and hour practices, benefit plans, and HR policies to identify successor liability concerns.
5. Financial and Tax Review – We analyze balance sheets, tax returns, and existing debt obligations to assess financial health.

This process not only informs deal value and structure, it also sets the foundation for post-closing success by highlighting what needs to be fixed, updated, or indemnified.

Getting to Closing: Agreements and Compliance Steps

Once the due diligence phase is complete and negotiations wrap up, attention shifts to finalizing the legal documentation. The purchase agreement is the centerpiece. It spells out the terms of the sale, outlines the responsibilities of each party, and includes representations and warranties regarding the condition of the business, assets, and compliance history.

Earnouts—additional payments based on the business’s post-closing performance—are sometimes used to bridge valuation gaps. These provisions must be carefully drafted to avoid ambiguity and future disputes. Ancillary documents like non-disclosure agreements and employment contracts often accompany the primary agreement, especially when key employees are staying on.

For regulated transactions, required filings (such as HSR notifications) must be completed before closing. In Michigan, filings with LARA will formalize the new ownership structure. All of this requires tight coordination to ensure timing, documentation, and compliance all align.

Common Pitfalls to Avoid

Even seemingly simple acquisitions can go off course without proper legal oversight. One major risk is “gun jumping”—the illegal coordination of business activities between buyer and seller before the transaction is officially complete. This is a clear violation of antitrust law and can result in significant penalties.

Another frequent issue is the failure to properly transfer or verify intellectual property. If patents, trademarks, or software licenses aren’t clearly assigned, disputes may arise after the transaction closes. Employment-related risks are equally important. Buyers may inadvertently assume liability for unpaid wages, misclassified employees, or unresolved discrimination claims if those issues aren’t uncovered and negotiated during diligence.

In Northern Michigan, where many businesses are family-owned or operate in tightly regulated industries (such as manufacturing, tourism, and agriculture), local issues often compound these risks. Land use restrictions, zoning limitations, and environmental regulations can also affect deal viability. A cookie-cutter approach won’t cut it—you need legal guidance tailored to the region and the transaction.

Legal Services That Align With Your Transaction

At True North Legal Group, we’ve built our legal membership and flat fee service models specifically for business owners facing major transactions. Our approach offers the responsiveness of an in-house legal team—without the unpredictable cost of hourly billing.

With our legal membership programs, you gain access to ongoing counsel throughout the entire M&A process. Our services are designed to:

• Guide you through deal structuring, term sheets, and negotiation strategy
• Conduct thorough due diligence and flag potential liabilities
• Draft and review purchase agreements, NDAs, and employment contracts
• Manage regulatory filings and state-level compliance steps
• Support post-merger integration from a legal and compliance standpoint

We know the legal landscape, we know Northern Michigan, and we know how to close deals that protect your interests and set your business up for long-term success.

If your business is exploring a merger, acquisition, or sale, don’t go it alone. Contact True North Legal Group today to learn how our flat fee legal services and membership programs provide clear guidance, predictable costs, and unwavering protection every step of the way.