M&A and the "Conscious Business" Movement
In M&A transactions, with some exceptions, there are always winners and losers. This becomes clearer as we enter the contract drafting phase with the lawyers.
In M&A operations, with some exceptions, there are always winners and losers. This becomes clearer as we enter the contract drafting phase with the lawyers.
It is often the legal professionals' responsibility to put the business premises and what has been agreed upon by the parties into writing.
However, it is not uncommon to come across long, confusing, repetitive, and even self-contradictory contracts, with an average of 50 to 60 pages. With attachments and possible side letters, they can reach hundreds of pages.
In a provocative analysis, I ask: do we need all this complexity, under the guise of guaranteeing rights?
In Brazil, a country plagued by legal uncertainty, many will say yes, but I believe there is a cultural issue that can be further explored.
The "Conscious Business" movement is growing worldwide. It is worth observing. These are integrative contracts based on values. The focus is not solely on safeguarding the rights of one party. The idea is to build collaborative and equitable solutions. This is done with a more accessible language and a more inclusive approach. In practice, they aim to be more relational contracts, seeking authentic communication without hidden meanings. There are consistent movements in this direction, such as the Holistic Lawyers Integrative Law Movement and the Legal Changemakers.
The question here is: is there room to apply such premises in mergers and acquisitions contracts? These contracts have various variables and interests involved. Can we seek a healthier journey between buyers and sellers? Knowing that financial value, in many cases, is just one of the objectives, would it be possible?
Preserving jobs, freedom to undertake, ending a shareholder dispute, assuming competitive technology, among others, are values and desires—some of which are anthropological in nature—that underpin mergers and acquisitions negotiations. Why not simplify relationships and the real objectives of each side?
Often, the perception of success or failure in M&A emerges years later, in retrospect, when one could have acted (or negotiated) differently. Dense contracts are being replaced by simpler and more objective documents in various areas, but not yet in M&A. Utopian? Perhaps! However, it is certain that behind this type of movement, there is always solid trust that strengthens personal and business relationships and generates billions in revenue, fewer losses, and less conflict. Is it cultural? A little! It depends on good education, clear and applicable laws, and exemplary punishment for deviations.
Written by Fabricio Scalzilli
Chairman Nello Investimentos
