For a buyer wishing to acquire a private company, juggling the many balls necessary to close the transaction is often no mean feat. Delays can undermine the confidence of the seller and potentially increase the purchase price (where, for example, it creates an opportunity for a seller to solicit other offers). The following are some important matters that should not be overlooked:

Organise a Team: Acquisitions can be highly unpredictable and fluid situations requiring immediate and unexpected demands on the executives. The team should have a realistic understanding of the time commitments and pressures involved in the deal.

Engage Advisors: Retain legal advisors early in the process. Depending on the complexity of the deal, it can be important to have legal advisors on board before there is any preliminary agreement on structure or terms. Otherwise, by the time legal counsel are engaged it may be too late for them to add value in improving the economics and structuring of the deal and to ensure the buyer obtains adequate protections from the seller.

Due Diligence: Carry out thorough and complete due diligence. A failure to complete appropriate due diligence can potentially lead to the buyer acquiring unexpected liabilities or encountering unexpected regulatory issues. Good due diligence also positions a buyer well when it comes to reviewing a seller’s disclosures against the warranties in the share sale agreement.

Identify Objectives: As negotiations with the seller get underway, it is important to identify the buyer’s objectives, distinguishing between deal breakers and the “nice-to-haves”.

Careful Planning: It helps to put in place standard organisation techniques to manage the process, (e.g., working group lists, time and responsibility schedules, issues lists), and to ensure agreement amongst all involved on the best channels of communication. It is important to set a timeline. Matters to be reflected on the timeline include the due diligence period, the negotiation of key transaction documents, any requirements for Board or shareholder meetings and any external consents needed (for example, regulatory or banking approvals).

Financing: Failure to ensure that adequate financing has been approved and is in place could lead to the deal collapsing. All costs must be anticipated, including financial and legal costs.

Contributed by Ruairi Bourke.

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