Mergers & Acquisitions Documentation & Negotiation
Get to grips with M&A, negotiations, sales & purchase agreements!
Training Course Content
Key M&A Documents
- Confidentiality agreement
- Teaser/Information Memorandum
- Head of terms/Letter of intent
- Exclusivity agreements
- Sales & Purchase Agreement (SPA)
- Shareholders agreement
- Management agreement
Focus on the SPA
- The skeleton structure of a contract
- Boiler plate – what’s covered
- Assets vs. share
- Price and payment structures
- Representations & warranties
- Condition precedents
- Other relevant matters
Completion and Price Adjustment Mechanism
- Locked box vs. completion accounts: pros/cons and key issues
- Cash free/ debt free
- Cash vs trapped cash
- Debt – what is included?
- Adjustments for working capital & capex
- WIP – problem areas
- Normalised working capital
- Normalise capex level
- Other adjustments to the price – warranties & indemnity claims
Soft Kills to Negotiate an SPA
- The ten fundamentals principles to negotiation techniques
- Set maximum and minimum objectives
- Keep analysing the deal variables
- Always aim high
- Never give a concession – always trade it
- Keep the whole relationship in mind
- Know when to walk away from a deal
- Know the negotiation process
- Have a BATNA (Best Alternative To a Negotiated Agreement)
- Select an effective negotiation strategy
- Change your strategy if necessary but never change your BATNA
- The six rules of influence: reciprocation, scarcity, authority, commitment, liking and consensus
- Before the negotiation, decide what you will do if nothing comes of the negotiation
- Unless you have a plan B, your anxiety may reach dangerous levels
- BATNAs set the threshold in terms of the full set of interests that any acceptable agreement must exceed
- Both parties doing better than their BATNAs is a necessary condition for an agreement
- Zero sum fallacy
- Participant's gain (or loss) is balanced by the losses (or gains) of other participant(s)
Final Case Study
- The participants are split into two groups
- A buyer (a multinational company) and a seller (a private equity firm)
- The key focus will be on negotiating and executing deals smoothly and correctly to the best interest of the parties while arriving at an acceptable solution for both parties
- The participants will role-play the M&A negotiation in two rounds
- The seller has been running a competitive process and has received non-binding offers
- One of the buyers is trying to obtain an exclusivity and has asked for a meeting with the seller to discuss their bid and the key clauses of the SPA.
- The interested buyer has been granted exclusivity and is negotiating the following SPA clauses:
- The price adjustment mechanism: locked box vs. completion account
- An earn-out or deferred payment structures
- The potential adjustments to working capital and capex
- The representation & warranties and related indemnities
- A pro or anti-sanbagging provision
- A MAC clausev
The cost of this course may vary by location. See above or request information for prices.
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