Richard Phillips presenting at The IoD Conference on 10 November 2010

© Copyright Matthew Arnold & Baldwin LLP, 2010. All rights reserved.

Buying and Selling Private Companies

Legal pitfalls and requirements

Richard Phillips

Partner, Corporate Team

Materials are for generic presentation purposes only and do not constitute legal advice which may © Copyright Matthew Arnold & Baldwin LLP, 2010. All rights reserved. be relied on in any situation.

Overview

1. Preparing for potential buyers

2. Finalising the deal

3. The nature of the process

4. What each party requires and why

5. Spanners in the works

Preparing for Potential Buyers• Start now

• Tidy up your business• Micro• Macro

• Appoint the right advisors

• Barriers to sale

• Price factors

• Know what you want to achieve• Share sale• Asset sale

Preparing for Potential Buyers Share sale/Asset sale

• Tax driven

• Liability

• Contracts

• Employees – when does TUPE apply and what is it?

• The job for your lawyer

Finalising the deal

• Heads of Terms

• Confidentiality

• Exclusivity

• Costs protection

• Realistic timeframe

The nature of the Process• Due diligence and information gathering

• Documentation:

• To reflect commercial deal• To allocate risk between parties

• Negotiation/meetings

• Finance aspects

• Dealing with employees• TUPE• Due diligence

• Final documentation will be the deal – not things said/done before

• Time commitments

What each party requires and why

• Buyer – protections

• Warranties

• Indemnities

• Restrictive covenants

• Seller

• As much risk free money as possible?

• Greater potential sum but more risk?

• Security for deferred consideration

Spanners in the works (1)

• Gulf in risk allocation

• Awkward other party

• Awkward other solicitor

• Relative size/sophistication of Buyer & Seller

Spanners in the works (2)

• Buyer is from another jurisdiction

• Third party difficulties

• Landlord

• Financiers

• Change of control

• Your Advisors

• Expect the unexpected

Summary

• Start now

• Take advice early

• Keep focussed on final objectives

• Be pragmatic

• Time commitments

• Anticipate problems

Contact

Richard Phillips Partner, Corporate Team E: richard.phillips@mablaw.comT: 020 7842 3335

Matthew Arnold & Baldwin LLP - Solicitors85 Fleet Street, London, EC4Y 1AE401 Grafton Gate, Milton Keynes MK9 1AQ21 Station Road, Watford WD17 1HT

E: info@mablaw.comW: www.mablaw.com

These slides have been produced only for the purposes of illustrating a talk given by Richard Phillips on 10 November 2010. They are not intended to be relied upon by any party and cannot constitute advice. Matthew Arnold & Baldwin LLP cannot be responsible in any way for any material contained herein.