The law imposes strict fiduciary responsibilities on the members of the governing body of an organization to ensure that any merger or consolidation is justified and in the best interests of the Organization. Directors and senior managers may be held personally and individually liable if they do not act with caution and diligence. Due diligence generally requires that the management body of an organization determine the financial and legal position of the organization with which the entity is merged or consolidated. This includes reviewing the other company`s accounts and records, administrative documents, meeting minutes, ongoing rights, employment practices, contracts, leases and insurance policies, as well as reviewing potentially significant financial obligations, such as funding retirement programs, binding obligations to suppliers, and the safety of investment vehicles. Ent. Boards often use accountants and lawyers to conduct due diligence audits. The opinions of these experts may be used to evaluate a merger plan, provided that the board of directors establishes a complete and accurate financial and legal profile of the other organization prior to the approval of the merger or consolidation. In addition to conducting routine due diligence audits, an organization`s board of directors should have legal assistance to review the impact of a proposed merger or consolidation on competition in the sector. Federal cartel laws prohibit mergers or consolidations that could significantly reduce competition in all business environments.
The U.S. Department of Justice, the Federal Trade Commission, attorneys general, and civil parties may review any transaction that may result in price agreements, supply manipulation, customer allocations, boycotts, or other anti-competitive practices. However, mergers and consolidations of non-profit organizations generally do not pose an anti-competitive threat. While it can be shown that the concentration between the two organisations does promote competition, the overall risk of anti-dominance is very low. As noted below, merger and consolidation are complex processes that require the agreement of the boards of directors and, where appropriate, the buy-in of each organization. In practice, it can be difficult to combine and coordinate the management bodies, staff and operations of two or more existing organizations. In addition, the institutional loyalties of members, senior managers and professional staff are often at stake, especially when organizations considering merging or consolidating are unequal in size and resources. In a joint venture, two or more nonprofits contribute their efforts, assets, and expertise to achieve a common goal. Participating organizations can develop a new unit (e.g. B a limited liability company or partnership) to carry out the business. Nonprofits often engage in additional joint ventures with other organizations. Joint ventures are essentially small joint ventures – which do not become the main objective of the participating organisations, which are often limited for a limited period of time.
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