Specialist advice to facilitate closing a deal
The Sale & Purchase Agreement is the key document for any transaction. Our Transaction Services team can facilitate its drafting alongside your legal advisors, where our financial and commercial insights are instrumental to reaching the desired outcome. We draw on our experience from working on hundreds of transactions to make sure the key points are fully understood by all parties involved.
The majority of our advice is in the following areas:
- Heads of Terms / Letter of Intent / Offer Letter – we often advise at the early stage of the transaction and can run various scenarios to show the impact of the agreed terms
- SPA definitions – we can provide and edit the definitions in the SPA to ensure the deal matches the commercial reality. Subtle wording differences can have a big impact and we’re experts in understanding this, advising, and importantly explaining our findings.
- Negotiation – however well the initial offer is drafted, there are always points to be negotiated. We have advised on deals where there are very large swings on the purchase price depending on our input. We bring together our findings during the due diligence exercise to reach the best outcome for our clients. The most frequent areas we negotiate on are:
- The true Revenues or EBITDA of the Target, including adjustments to these figures for exceptional or non-maintainable items.
- Most deals are conducted on a cash free debt free basis, the definition of which varies greatly between companies. Using our transaction experience, we work to determine the definition of ‘free cash’, debt and normalised working capital.
- Consideration –The consideration is arguably the most important section of the SPA. In some cases, this can be a fixed number, however more often than not, there are estimated figures, true-ups, earn-outs and deferred elements. We can decipher and communicate what the agreed position is to ensure there are no surprises when it comes to the completion date.
- Completion Mechanism – how the deal completes in terms of timing and adjustments is unique for each transaction. Whether a locked-box or completion mechanism is used, we have all the tools and knowledge for you to be able to align the SPA with the commercial intention of the transaction.
- Post-deal support – we can review the final completion accounts, provide earn-out workings and assist with any disputes raised.