Integrating founders after an M&A in Brazil requires detailed care to ensure a smooth transition and ensure that the company’s interests are preserved, especially in cases where a control sale occurs.
Below, we present 3 critical points and the relevant legal aspects that must be addressed in a Sale and Purchase Agreement (SPA) to manage these precautions.
1. Clear Definition of Roles and Responsibilities: The SPA must expressly provide for the roles and responsibilities of the founding partners in the new organizational structure. It is essential to specify your duties and limits of authority to avoid ambiguities that could lead to internal conflicts. Precisely define the governance structure, establishing committees and procedures for decision-making is a must, thus ensuring that the roles of the founders are formally recognized and integrated into the new management.
2. Non-Competition, Confidentiality, and Integration Plan Clauses: It is important to insert provisions to ensure that founders do not compromise the new structure of the company or reveal confidential information. An integration plan that includes cultural and organizational alignment strategies (including training and development programs) can facilitate founders’ adaptation to the new corporate culture.
3. Incentives: Incentive packages, such as bonuses and equity shares, that reward the performance and ongoing contribution of founders can be brought forward in the SPA. These packages must be linked to specific goals and retention period to ensure alignment with the company’s strategic objectives.
The correct articulation of these points in the SPA is essential to ensure the efficient integration of founding partners and the continued success of the company after an M&A process. Addressing these aspects thoroughly helps to avoid future problems and maximize the value of the transaction.
