M&A
Whether you are buying or selling, if a business is being bought and sold, the legal documentation and the legal aspects of the transaction will be shaped principally by the client's attitude to risk.
There is always a financial risk and a legal risk in M&A transactions. Our principal business is to help the client manage the legal risk and to feel comfortable that the risk is acceptable in the context of the deal. We have the experience representing buyers and sellers - whether they are owner managers or major corporate clients - in navigating through these waters.
Each sale of a business involves a different risk profile. Different businesses have different sensitivities and potential areas of difficulty. Our aim therefore is to understand at a very early stage what the target business involves in detail because only then can the deal's potential risk areas be understood and dealt with.
The process before the contract is drafted is vital. A heads of agreement is often the starting point. They can and do go wrong and this can set the deal off on the wrong foot. Ideally heads of agreement will set out the principal commercial aspects of the deal. If there are known deal-breakers then they can usefully be addressed so that the parties proceed in the knowledge that their risk of abortive costs and wasted time are reduced. Major structural issues, often tax related, can also be raised at this point. Correctly handled the heads of agreement are a good runway towards completion.
Due diligence needs to be organised. So often a seller will be frustrated by being asked to answer the same question or provide the same document by three different people on different occasions. Simple management of this process can reduce wasted time and fees on both sides.
The quality of the disclosure letter is of crucial importance towards a seller being satisfied with the risks of the deal. If all the known skeletons have been pulled out of the cupboards and put on view, the seller can feel confident that it has limited its risk to matters which are unknown - this helps the negotiation of the warranties and an evaluation of the residual risk.
A sensible purchaser will also be comforted by a thorough disclosure exercise as this will limit the chances of unpleasant surprises after completion. Even if warranties and indemnities provide contractual protection from the risk of undisclosed liabilities, it is far better to have been aware of a problem and taken account of it in the deal negotiation than to have the opportunity to litigate at a later date.
The deal process itself also needs managing - from heads of agreement, due diligence, contract, exchange and completion. The one thing which is certain is that the process is time consuming for both sides but particularly for the seller as the key management find themselves doing two jobs at once - their normal job of running the company and the pressured tasks associated with selling.
Deal structures can be complex too - whether the sale is of shares or assets, by a normal sale or after a de-merger, by cash or with equity and whether the consideration is paid up front or on a deferred basis.
Our team can provide the expertise for all of these needs from deal structuring to heads of agreement, negotiating the sale and purchase agreement, right through to completion. If problem solving is required then we believe we have the right people to provide valuable experience and creativity to find the answers and to get the deal done.