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 …
Checklist for members’ written resolution
I review resolutions as part of my M&A and other transactional work. Here’s a list of what I typically check to ensure compliance with the Companies Act 2016 (CA) when reviewing members’ written resolutions of private companies in Malaysia. 𝗖𝗵𝗲𝗰𝗸𝗹𝗶𝘀𝘁 𝗳𝗼𝗿 𝗽𝗿𝗲𝗽𝗮𝗿𝗶𝗻𝗴/𝗿𝗲𝘃𝗶𝗲𝘄𝗶𝗻𝗴 𝗺𝗲𝗺𝗯𝗲𝗿𝘀’ 𝘄𝗿𝗶𝘁𝘁𝗲𝗻 𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻 1. Confirm private company status …
What is the difference between a “𝘀𝘂𝗯𝘀𝘁𝗮𝗻𝘁𝗶𝗮𝗹 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿” and a “𝗺𝗮𝗷𝗼𝗿 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿”?
If you are a corporate lawyer and you ask your supervising partner the question above, be prepared that you may be told to do your own reading. In short, a “substantial shareholder” of a company refers to a person who has an interest in one or more voting shares in …
M&A in Malaysia: What you need to know about private limited companies
Private companies limited by shares are frequently encountered legal entities in M&A transactions, whether as sellers, buyers or targets. Understanding the requirements governing private limited companies is necessary when drafting shareholders’ agreements. Some of the key requirements governing private limited companies: 1. The Companies Act 2016 (“CA”) mandates that a private …