Q: Should two businesses trying to merge have separate attorneys to most effectively represent both sides?
A: All things being equal each business should have their own legal counsel. As a practical and ethical matter, no attorney should represent both sides to a transaction.
Ideally, yes. The legal needs and goals of each business may well be different and each side should have independent counsel representing it.
In very limited circumstances, an attorney can be retained to draft the transaction documents as instructed by the two businesses. However, in this circumstance, the attorney can not give either side legal advice and would be working for the solely for the resulting business (i.e. the merged business).
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