Richard Phillips presenting at The IOD on 11 October 2012

© Copyright Matthew Arnold & Baldwin LLP, 2012. All rights reserved.

Buying & Selling Private Companies

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, 2012. All rights reserved. be relied on in any situation.

Overview

1. Preparation

2. Finalising the deal

3. What the process involves

4. What each party requires and why

5. Spanners in the works

Preparation

• Start now• Ducks in a row…

• Worthwhile to the Seller

• Smoother deal for the Buyer

• Funding – banks/private equity/capital markets

• What type of deal – selling/buying shares or selling/buying assets?• The difference

• Liability

• Contracts

• Employees

• What will your lawyer need to do differently?

Finalising the deal

• Heads of Terms

• Confidentiality

• Exclusivity

• Costs protection

• Realistic timeframe

What the Process involves

• 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

• Retention

• Completion accounts

• Restrictive covenants

• Deferred consideration – and earn out?

• Seller – security and defence• As much risk free money as possible?

• Greater potential sum but more risk?

• Security for deferred consideration

• Disclosures and limitations on warranties

Spanners in the works (1)

• Gulf in risk allocation

• Awkward other party

• Awkward other lawyer

• 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

• From left field…

Summary

• Take advice early

• Understand your own limits on risk and plan tactics accordingly

• Understand the other party

• 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 1AE21 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 11 October 2012. 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.