The Legal Side of Mergers and Acquisitions: Deals & Due Diligence
By Anivarth Parthasarathy
When Microsoft announced its $68.7 billion acquisition of Activision Blizzard, headlines exploded. Behind the scenes, the real work was just beginning. Corporate lawyers were scanning through thousands of pages of financial records, reviewing property portfolios, navigating antitrust regulations, and drafting agreements to complete one of the largest tech mergers in history. These mergers and acquisitions (commonly referred to as M&A) may seem like power plays made by board members, but they are driven and enforced by a complex legal procedure of corporate lawyers and heavy paperwork.
THE LEGAL PROCESS
Behind every successful merger or acquisition is a carefully managed legal process. While each transaction is unique, most follow a five-part framework that requires strategic legal work at every step:
1. Early Planning
The process starts before the deal is even proposed. Companies that are thinking of selling or merging begin organizing their legal and financial materials for review. If a buyer company shows interest, both parties typically sign a Non-Disclosure Agreement to protect confidential information shared during initial talks.
2. Laying Out the Framework
Next, the buyer and seller negotiate a general outline of the deal, often captured in a document called a Letter of Intent. This outlines the potential structure of the deal, timelines, and any red-flag issues like regulations or competition. While not always legally binding, the Letter of Intent implies serious interest in the merger.
3. Due Diligence
One of the most critical steps is due diligence, which is the deep-dive investigation of the target company. Lawyers analyze and assess everything, such as corporate records, tax exposure, intellectual property, binding contracts, previous lawsuits, regulatory risks, and more. The goal is to spot potential problems, value the company accurately, and figure out the final agreement.
4. Finalizing the Deal
If the buyer is satisfied with the records of the company they are purchasing, both sides work to negotiate the final agreement. This includes price, risk allocation, legal protections (like warranties), and how ownership will transfer. The final terms are formalized in documents such as a Share Purchase Agreement or an Asset Purchase Agreement. This depends on whether the transaction involves shares of the business.
5. Implementation
The final stage involves putting the deal into action. This involves transferring licenses, notifying employees, updating company records, securing final regulatory consents, and aligning operations. Lawyers are also involved in any post-closing adjustments, ensuring the transaction unfolds exactly as agreed.
MICROSOFT AND ACTIVISION BLIZZARD
In January 2022, Microsoft announced it would acquire Activision Blizzard for $95 per share in an all-cash deal, totaling $68.7 billion. The acquisition was structured as a stock purchase, meaning the lawyers would write a Share Purchase Agreement that outlined price, ownership transfer, and legal protections. However, the legal complexity extended far beyond the paperwork. Regulators and rival companies feared the deal would give Microsoft too much control over the gaming market. Corporate lawyers worked to address those concerns by offering binding commitments, such as keeping popular titles like Call of Duty on rival platforms. After nearly two years of legal battles and negotiations, corporate lawyers closed the deal in October 2023, marking both a financial and legal victory for Microsoft and its lawyers.
FINAL THOUGHTS
Mergers and acquisitions are more than headline-making business moves. They demand skill, strategy, and precision from corporate lawyers. From planning and due diligence to negotiation and post-closing implementation, corporate lawyers serve as the backbone of every successful deal. In a world where businesses are constantly evolving, it’s the legal minds behind the scenes who ensure that deals aren’t just bold, but built to last.
CITATIONS
Movement, Q. ai-Powering a Personal Wealth. “Microsoft’s $69 Billion Activision Blizzard Acquisition Finally Approved.” Forbes, https://www.forbes.com/sites/qai/2023/10/16/microsofts-69-billion-activision-blizzard-acquisition-finally-approved/. Accessed 5 June 2025.
PricewaterhouseCoopers. “Mergers & Acquisitions - The 5 Stages of an M&A Transaction.” PwC, https://www.pwc.com/mt/en/publications/tax-legal/mergers-and-acquisitions-5-stages-of-MA-transaction.html. Accessed 5 June 2025.