Shares-for-shares M&A transaction: Sellers to take note
An M&A transaction in which the consideration for the shares in the target company is settled by shares in the acquiring company (purchaser) requires more planning than a cash transaction. A seller should consider the following to assess whether receiving shares in the purchaser in exchange for the sale of …
M&A Insights for Founders Who Want to Sell Their Business
Some founders embark on their entrepreneurial journey with the end goal of selling their business. The founders could smoothen the sale process by ensuring their business are managed in compliance with basic legal requirements. If you are one of those forward-looking founders, hereโs how: 1.ย ๐๐ผ๐ป๐๐ฟ๐ฎ๐ฐ๐๐ Ensure contracts which are meant …
The One Question to Ask in M&A Transactions
When discussing M&A deals with clients who are seeking to undertake acquisitions, I always ask this question: ๐๐ฉ๐บ ๐ฅ๐ฐ ๐บ๐ฐ๐ถ ๐ธ๐ข๐ฏ๐ต ๐ต๐ฐ ๐ข๐ค๐ฒ๐ถ๐ช๐ณ๐ฆ ๐ต๐ฉ๐ช๐ด ๐ค๐ฐ๐ฎ๐ฑ๐ข๐ฏ๐บ? Understanding the underlying motivation behind our clientsโ decision for their acquisitions helps us to achieve the following: – We direct our focus to what matters …
Due diligence: Common issues in investeeโs contracts
At our firm, we are regularly engaged to carry out legal due diligence for investors seeking to invest into promising companies. Some of these investees/target companies are family-owned business and startups. We frequently encounter situations where contracts have been entered into by an unintended or wrong corporate entity, creating potential …
M&A: Should you do assets deal or shares deal?
A client wanted to acquire shares in a company. As we discussed further, it was clear that the buyer wanted to acquire certain assets only of the company. The company was supposedly dormant with a few assets and no ongoing operations. For unknown reason, the seller was only willing to …
M&A: Should seller accept shares as consideration?
In the sale and purchase of a business, the seller may receive payment by way of shares issued by the acquiring corporation (i.e. consideration shares) instead of cash. Before accepting payment in the form of consideration shares, the seller should consider the following: 1.ย Assess the liquidity of the consideration shares …
M&A: Challenges when the parties are private equities
One of the most challenging M&A negotiations I had was when both the seller and buyer were private equities. It should be noted that private equity funds are primarily focused on maximising returns for their investors and expediting the distribution of proceeds. Therefore, retaining a portion of the purchase price …
How does a company control its shareholder composition?
One common reason for a company to control its shareholder base is to prevent a shareholder who is no longer actively involved in the day-to-day operation of the company from exerting influence over the company. A company may achieve this control through compulsory transfer provisions. These provisions typically require officers …
M&A: What business owners should take note when selling their business
Business owners who are strategically developing their business with the intention of selling in the future should take note of the following: 1. Some potential buyers may want assurance that there is a management team who can run the business effectively after the business ownersโ exit. To incentivize key management …
Exclusivity period in M&A
In the M&A context, an exclusivity period means that for a certain period of time, the seller agrees to negotiate only with one potential buyer. From the buyerโs perspective, it is beneficial to have a longer exclusivity period for the following reasons: 1. A longer exclusivity period gives the buyer …