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Euromoney Learning Solutions

Mergers & Acquisitions Documentation & Negotiation

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About the course

Get to grips with M&A, negotiations, sales & purchase agreements

Agenda

Day 1

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
  • Recitals
  • Assets vs. share
  • Price and payment structures
  • Representations & warranties
  • Disclosures
  • Covenants
  • Indemnities
  • 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
  • Receivables
  • Inventory
  • WIP – problem areas
  • Normalised working capital
  • Normalise capex level
  • Other adjustments to the price – warranties & indemnity claims

Day 2

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 BATNA
  • 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

Round I

  • 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.

Round II

  • 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 clause

Trust the experts

Serge Vidal

Serge is an experienced Corporate Finance professional with over 20 years’ experience in M&A and capital market transactions. He has successfully completed in excess of EUR 30 billion across multiple geographies (US, Europe, MENA).He began his career as a Credit Analyst at Banque Continentale...

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