Mergers & Acquisitions

Course Overview:

This three day seminar covers all aspects of buying and selling private companies and management buy-outs.

On the first day all aspects of an acquisition process from initial strategies for expansion through to planning, due diligence, negotiation, execution and the preparations for a successful integration will be covered.

The major risks and problems likely to be encountered by professional advisers, principals and entrepreneurs are highlighted with guidance for their avoidance or mitigation. Process and commercial failures are examined and the necessity for a sound acquisition plan is emphasised.

The second day focuses on the seller’s objectives, namely to achieve the highest price subject to the least onerous terms and to walk away from a transaction with measurable and finite liabilities.

Participants will examine common errors and pitfalls in the disposal process and emphasises strategies for realising a maximum value for a seller whilst limiting the legal redress of a buyer.

Procedures for valuing a company and for the planning, negotiation and execution of its sale are described together with the meaning and effect of representations, warranties and indemnities. Participants will also review the principal points to be negotiated in the Sale & Purchase Agreement to limit a seller’s liability.

The third day covers management buy-outs and highlights the objectives of the various parties involved and the manner in which a successful transaction can be achieved. The financial instruments employed are examined in detail together with the valuation, pricing and structure of the deal.

Course Content:

Day 1:

Introduction

• Reasons for acquisitions
• Process and commercial errors
• Why acquisitions fail
• Planning for success

Formulating the strategy

• Acquisition criteria
• Searching for growth
• Alternative strategies
• The acquisition plan
• Preparing the management
• Measuring the risk
• Locating and screening the targets
• Assembling the professionals
• Approach tactics

Investigating the target

• Commercial due diligence
• Deciding on the price
• Further due diligence
• Evaluating the synergies

Guidelines on negotiation

• Establishing clear objectives
• Representations, warranties & indemnities
• Earn-outs
• Assets or shares?
• Pre-sale hive-down?

Integration

• A merger of equals?
• Handling staff and political problems
• Effective internal & external communication
• Implementing decisions
• Avoidance of disintegration

Day 2:

Introduction

• Typical mistakes in disposals
• Reasons for selling
• Planning for success
• Preliminary considerations

Valuation

• Initial guidelines
• NAV, DCF & PERs
• Valuation by comparison

Pre-sale planning

• Appointment of advisers
• Disclosure to advisers
• Engagement letter and fees
• ‘Sell side’ due diligence
• Preparing the management
• Grooming and separation issues

Executing the sale

• Writing an Information Memorandum
• Searching for a buyer
• Confidentiality Letter
• Letter of Intent & Heads of Agreement
• Sale & Purchase Agreement

Negotiations

• Preparatory tactics
• Arguments on valuation
• Exclusivity
• Representations, warranties and indemnities
• Limitation of seller’s liability
• Earn-outs

Legal considerations

• Completion accounts
• ‘Locked box’ transactions
• Avoiding unprofessional tactics
• Completion

Day 3:

Background

• Private equity
• Different types of transaction
• An effective Business Plan

The MBO decision

• Suitability of the business for an MBO
• The management’s perspective
  • How much should the MBO team invest?
  • What percentage equity should they get? 
• The vendor’s perspective
• The investors’ perspective

The parties and their roles

• Private equity house
• Accountants
• Solicitors
• Bankers

Structure of the deal

• Pure equity, quasi equity & ratchets
• PIK, mezzanine & zeros
• Vendor loan notes 
• Junior debt/mezzanine finance/zeros
• Senior debt & alphabet notes
• Tax considerations
• Decisions on insurance and pensions
• Additional complexities of public-to-private deals

Exit route

• Planning
• Trade sale
• Share buy-back
• Second round buy-out
• Flotation

Delivering this course in-house for you to a number of participants could be very cost effective. Please call us on 020 7387 4484 to discuss this further.

If you have any questions about this seminar please write to us at post@redcliffetraining.co.uk.