How does a merger between two companies work and how can a lawyer help you through the process?

In the Romanian business environment, mergers are an increasingly common solution for companies seeking to grow, strengthen their market position, cut certain costs or reorganise their internal structure. A merger can help a company take over portfolios, teams, clients, assets, know-how or technology, but it can also bring significant risks if the process is not properly prepared.

Although it may look at first sight like a purely economic decision, a merger between two companies is a complex legal procedure. It involves reviewing contracts, checking liabilities, obtaining approvals from shareholders or members, filing documentation with the Trade Register, protecting creditors, updating corporate documents and, at times, obtaining tax approvals or clarifications.

A merger lawyer plays an essential role in this process. They do not merely draft documents; they assess the risks, propose the appropriate structure, coordinate the procedure and protect the company's interests before, during and after completion of the merger.

At Buju, Stanciu & Asociații, we assist companies in merger, reorganisation, acquisition and restructuring processes, in both local projects and transactions with international elements. Our experience covers corporate law, company law, litigation, taxation, technology and emerging fields such as cryptocurrencies and digital assets.

What does a merger between two companies mean?

The purpose of a merger differs from case to case. Some companies are looking to expand in the market. Others want to simplify a group of companies, eliminate administrative costs, integrate business lines or prepare for an investment. Mergers are also used in internal reorganisations, where several companies within the same group are combined to operate more efficiently.

The key point is that a merger is not simply a matter of signing an agreement between shareholders. It affects assets, contracts, employees, creditors, tax obligations and the rights of shareholders or members. Each stage must therefore be carefully prepared.

Merger vs. acquisition: what is the difference?

In practice, mergers and acquisitions are often discussed together, under the term M&A (mergers and acquisitions). Legally and practically, however, there are important differences:

The choice between a merger and an acquisition depends on the objectives, the shareholding structure, taxation, liabilities, contracts, authorisations, risks and the integration plan. A merger lawyer can assess which option suits the company better.

Main types of mergers

1. 01

   Merger by absorption

   One company takes over one or more other companies. The absorbed company ceases to exist as a legal entity and its assets are transferred to the absorbing company. Unlike the dissolution of a company, here the assets are not liquidated but pass to the absorbing company. This option is frequently used where a large company takes over a smaller one, or where a group wishes to simplify its structure.

2. 02

   Merger by consolidation

   The combination of two or more companies to form a new company. The participating companies cease to exist and the business continues through the new entity. This may be suitable where the parties want a new, neutral structure with governance rules established from scratch.

3. 03

   Mergers between companies within the same group

   Common in internal reorganisations. The aim may be to reduce administrative costs, centralise operations, simplify accounting or prepare for a sale or investment.

4. 04

   Mergers between competitors

   A merger between companies operating in the same market may be aimed at increasing market share, expanding the portfolio or consolidating resources. In such cases, competition aspects and any obligations towards the competent authorities must be carefully assessed.

5. 05

   Cross-border mergers

   This involves companies from different states. It is more complex, as it requires the applicable laws to be reconciled, an international tax analysis, translated documents, differing publication rules and coordinated procedures across several jurisdictions.

The main stages of a merger

1. Preliminary analysis. The objective is clarified: why the merger is being carried out, what it is intended to achieve, and whether there are hidden liabilities, disputes, affected contracts or authorisations to be transferred. The lawyer reviews the structure of the companies, the constitutive documents, the shareholding, the key contracts, the guarantees and any existing restrictions.
2. Legal, financial and tax due diligence. One of the most important stages. It involves reviewing the corporate documents, title to assets, contracts, litigation, permits, intellectual property, employment relationships, financial statements, debts and tax exposure. Without thorough due diligence, the acquiring company may inherit unforeseen problems.
3. Choosing the merger structure. The appropriate legal form is determined - merger by absorption, merger by consolidation, group reorganisation - depending on the commercial objective, costs, timing, tax treatment, shareholding structure and risks.
4. Drafting the merger plan. The central document of the procedure: the participating companies, the form and terms of the merger, the exchange ratio for the shares or holdings, the effects on the members and the date from which the operations are attributed to the new structure. Poor drafting can lead to delays or challenges.
5. Approval of the merger. Each company approves the merger in accordance with its constitutive documents. Resolutions of the members or shareholders are adopted and the required majorities verified. Where there are minority shareholders or creditors, communication must be handled carefully.
6. Filing the documents with the Trade Register. The merger plan and the documents required by law are filed. The procedure may involve publication of the plan, verifications, opposition periods and registration of the final amendments. This stage must be coordinated rigorously.
7. Post-merger integration. A merger does not end with registration. Next come updating contracts, notifying partners, transferring operations, integrating teams and checking tax obligations. Many problems arise precisely after completion.

Common risks in a merger

A merger can fail or generate losses if the risks are not identified in time. The most frequent problems:

• Hidden debts and pending litigation. Obligations or proceedings the company takes on without having anticipated them, discovered only after completion.
• Contracts with automatic termination clauses. Partnerships that terminate at the very moment the structure changes, unless they are addressed in advance.
• Creditor opposition. Creditors may have protective mechanisms where the merger affects their rights.
• Disagreements between members. Conflicts over vision or control can escalate as far as the exclusion of a member from the company, if they are not managed legally.
• Incorrect valuation of assets and tax risks. Overvalued assets or unanticipated tax liabilities that completely change the economics of the transaction.
• The absence of a post-merger strategy. Two companies may be compatible on paper yet difficult to integrate operationally. The legal analysis must be complemented by a realistic commercial assessment.

Concrete examples of mergers

A group holding three separate companies - software development, maintenance and consultancy - may combine them by absorption into a single entity in order to reduce administrative costs and simplify accounting. The typical risk here lies in maintenance contracts containing automatic termination clauses triggered by a change of structure: if they are not addressed in advance, several key clients may leave at the very moment of the merger.

Two regional distributors covering different territories may merge to become a national player. As this is a merger between competitors, competition law aspects must be carefully analysed and the exclusive distribution agreements aligned, so that the new entity does not inherit overlapping or conflicting obligations.

A Romanian software company merging with an entity from another EU Member State enters into a cross-border merger. Here, due diligence also covers rights in the source code, licences, platform accounts and digital assets, and the procedure must be coordinated simultaneously in two jurisdictions, with translated documents and differing publication rules.

Mergers in technology, crypto and digital assets

Mergers in technology and digital assets raise additional issues. It is not merely a question of classic assets, bank accounts and contracts. There may be digital wallets, tokens, software platforms, rights in source code, smart contracts, databases, licences, exchange accounts, intellectual property rights and compliance obligations.

In the crypto sphere, a merger may involve the transfer of digital assets, the integration of platforms, verification of transaction history, fraud risk analysis and an assessment of how the assets are held or controlled. At Buju, Stanciu & Asociații, our experience in commercial law, litigation, technology and cryptocurrencies allows a multidisciplinary approach: the lawyer must understand both the legal mechanisms and the technical reality of the assets involved.

The role of a merger lawyer

A merger lawyer is involved at every stage of the procedure. At the initial stage, they analyse the risks and propose the legal structure. During preparation, they coordinate the legal due diligence and draft the documents. At the approval and registration stage, they manage the relationship with the Trade Register and check compliance with deadlines. After completion, they assist with the legal integration of the companies.

Beyond the technical side, the lawyer also plays a strategic role. They can identify the sensitive points in the negotiation, protect minority shareholders, anticipate creditor opposition and propose solutions to reduce litigation risk.

Why Buju, Stanciu & Asociații?

We provide legal assistance to companies involved in mergers, acquisitions, reorganisations and complex commercial projects. Our team combines experience in corporate law and company law with practice in litigation, technology, digital assets and matters with a financial or criminal dimension.

This combination matters because a merger is never a mere formality. It may involve debts, disputes between members, unbalanced contracts, tax risks, commercial litigation or assets that are difficult to value.

Our approach is geared towards clarity and the protection of the client's interests: we review the documents, explain the risks, propose solutions and coordinate the procedure, so that the process is as efficient and secure as possible. The first step is a short discussion about your company's situation.

Conclusion

A merger between two companies can be a significant opportunity for growth, efficiency and consolidation. At the same time, it is a serious legal procedure, with effects on assets, contracts, debts, employees, creditors and shareholders. A merger lawyer helps the company avoid costly mistakes, choose the right structure and complete each stage correctly - from due diligence and the merger plan through to registration and post-merger integration.

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