There are several Korean drama series that have become a popular topic of conversation on the Internet lately. After the World of the Married Couple series, there is the Start-Up series that just ended a few weeks ago. This series tells of a group of young people who are starting a business with the help of an accelerator. This drama bears a lot of familiarity with the situation in recent years.
There is an episode that tells how selected startups must present their business to get investment. The startup that wins finally gets the attention of a global company interested in their technology.
However, instead of investing, it turns out that this global company intends to make an acquisition. Acquisition is a form of a corporate action other than Merger and Consolidation. While in a merger and consolidation companies are fused into one, in an acquisition this is not what happens. In addition to a share takeover, an acquisition also causes a change in control, where the acquiring company will have full control over the company being acquired.
The legal lesson that we should draw from this series is that a lack of a thorough and proper review process when signing an acquisition agreement spells disaster for a business. Although there are no scenes that show the review process–as the series also moves at a fast pace–it can be seen that the agreement is signed only one day after it is received. Undesirable things then happen, which later lead to the dismissal of the CEO of the startup company by the global company.
To prevent any undesirable thing from happening during the course of an agreement, it is necessary that a review process be undertaken by a lawyer.
You may really need funds for capitalizing your business, or you may be experiencing a lengthy period of vacuum in your job due to the Covid-19 pandemic, but you must stay observant and careful in assessing an agreement or partnership that you are going to enter to prevent unwanted things in the future. Just received an agreement to co-sign with your business partner? Don’t rush to say OK. Make sure you review the agreement you are going to enter with your business partner before signing it.