What do you mean by Mergers & Acquisitions or 'M&A'?
There are many reasons why you may wish to expand or develop your business and there are a number of ways in which you can do this – all of these fall under a general "M&A" banner. In broad terms, you are most likely to proceed by acquiring either the shares of another (target) company or by the purchase of that company's business and assets. Where management are involved in an acquisition, often supported by private equity investment or by a bank, this is known as a Management Buy-Out (MBO) or a Management Buy-In (MBI).
I am the managing director of a large business. Can you help us if we want to expand by acquiring another company or business - for example one of our competitors?
Of course. We have extensive experience in transactional work and have been through both the acquisition and disposal process for corporate clients and owner-managers, many times. We are familiar with the key issues that commonly arise in any such transaction and have a really good understanding of what is normal and customary in the market.
We understand that a transaction of this nature is complex and sometimes daunting. We are able to assist you with the complete legal process of acquiring a company, a group of companies or the assets of a business – and seek to de-mystify the process. Our team of specialists would work closely with you and your professional team to ensure that the transaction proceeds smoothly and that all aspects are co-ordinated.
What role does the lawyer play when advising a buyer on an M&A deal?
In the early stages of a transaction, we will typically advise on deal structure and the negotiation of heads of terms, confidentiality agreements and exclusivity arrangements. Later, we will carry out legal due diligence into the target business and liaise with the seller's professional team to negotiate the transaction and banking documents.
Where relevant, we also advise on the terms of any debt finance required to buy the business, and where private equity is used (for example on a MBO or MBI), on the detailed terms of the equity documents (for example, the investment agreement, articles of association and loan note instruments).
We recognise that your acquisition is only the beginning and it is key that once the "deal is done", you are in a position to successfully run the new, enlarged business. We therefore regularly advise trade buyers on their arrangements for transitional services and post-acquisition structuring.
Why carry out legal due diligence?
For acquisitions that are carried out under English law, the principle of "buyer beware" applies. It is therefore key that a buyer carries out its own investigations into the target business at the negotiating stage of a deal.
We can carry out this due diligence review for all types of M&A transactions, identifying legal issues and areas of risk within the target business. By doing so we aim to put you, as a buyer, in a better position to assess the risks and rewards of the proposed acquisition and allow you the opportunity to renegotiate the terms of the purchase.
We work with our clients at the outset of a transaction to agree a scope for the legal due diligence exercise. A large corporate client may undertake most of its due diligence 'in-house'. In other situations, time and cost factors mean that a full exercise is not appropriate. In such cases we can produce a high-level "red flag" report for you, highlighting key material issues. Ultimately, the extent of any due diligence exercise will be dictated by the value and importance of the acquisition to a buyer and the buyer's appetite for risk.
We appreciate that the real work for the buyer starts once completion has taken place. We make sure that our due diligence reports include a set of recommendations, highlighting changes that should be made to the business following completion of the deal. We can also assist buyers with the legal aspects of their post-completion audits.