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: 𝘞𝘩𝘺 𝘥𝘰 𝘺𝘰𝘶 𝘸𝘢𝘯𝘵 𝘵𝘰 𝘢𝘤𝘲𝘶𝘪𝘳𝘦 𝘵𝘩𝘪𝘴 𝘤𝘰𝘮𝘱𝘢𝘯𝘺? Understanding the underlying motivation behind our clients’ decision for their acquisitions helps us to achieve the following: – We direct our focus to what matters …
Due diligence: Common issues in investee’s 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. 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 owners’ 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 buyer’s perspective, it is beneficial to have a longer exclusivity period for the following reasons: 1. A longer exclusivity period gives the buyer …
M&A: It’s not always about getting the best terms
There’s always a little excitement whenever I start an M&A exercise. My excitement is tempered by what I know is coming- tight deadlines, work around the clock and lots of coffee. I always want to do my best for every deals. For me, this means getting the best deal for …
A Director Cannot be Absolved from Responsibilities by Appointing an Alternate Director
Reviewing constitution (usually in the context of a corporate transaction) is part of my job as a corporate lawyer. It’s not always fun but it’s always a good refresher of the Companies Act 2016. While reviewing the constitution of a company, I came across the following provision which made me …