case study Flashcards
to discuss
o Liabilities
o Opportunities - opportunities for growth? Expansion of services? Expansion of reach?
o price/profit - is it profitable? Will they be able to make back the money?
o potential litigation - pending litigation? Any potential litigation with transfer of power?
o supply contracts (potential terms on how acquisition might affect supply agreements)
o gov regulations and charges e.g. in environmental concerns ask client to check whether these regulations might make a difference to transaction
skills they are evaluating
o Problem solving - analysis of data, professional skills, creative solutions, clear rationale
o Driven - high performance goals
o Influential - convincing others to adopt their point of view, calmly express opinion
o Customer focus - focus on client’s needs and sensitivites
o Organised and systematic - unifying rationale for presentation
o Verbal and communication skills - enthusiastic but formal, pace your speech, vary tone, summarise your progress using key points
o Expectations
o Understanding
o Thoroughness
o Logical thinking
o Creativity
o Organisation
general structure
o Introduction to myself
o Maybe exec summary?
o Outline background of situation
§ Factual background
§ Root out key Commercial drives
o Analysis
§ Go through section and provide suggestions - link to commercial implications and relevant law
§ Are they the only options
§ Practical considerations - what are the risks
§ Reputational issues? Conflict of interests?
§ How does law apply to their questions?
§ Do you have any further questions you want them to clarify?
§ Always link to practice areas and sector
o Summarise what I have said, provide advice on overall situation and how to proceed
o Thank you very much for your time…
different practice areas involved in m&a
o M&A
o share purchase agreement
§ share sale = buy everything, inc branding, name, etc; asset sale as buyer can pick and choose
o transitional services agreement (if centralised admin, IT, etc)
o competition/antitrust
o approval of shareholders
o potential litigation
o warranties (find out problems, that products are not faulty). reputational question.
o indemnities (know there are problems & need protection)
o real estate
o leases, factories
o capital markets, PE
o funding of transaction – bc even large firms don’t sit on a lot of capital; so equity, debt, shares
o TPE (tax, pension, employment)
o employees
o Investigate pension scheme – see if it is underpaid, how will seller contribute, will buyer have to contribute?
o SPVs (special purpose vehicles) in tax-friendly jurisdictions
strengths for dla
§ Strong breadth & depth across different practice areas, strong presence in variety of jurisdictions. One-stop-shop for its clients.
§ Market lead in diversity initiatives.
§ Client & team focus.
§ Legal tech. Innovation & adaptability.
§ Main strength = being experts but also trusted advisors
weaknesses of dla
§ Need more diversity
§ Office environment because of COVID
§ Want to be top business law firm globally - ensure consistency
§ But these can be seen as opportunity for improvement
opportunities for dla
§ Post corona ○ Litigation clients getting out of commercial leases) ○ Restructuring (economic crash post-Corona) § Brexit ○ Banking & Finance in US ○ Emerging markets ○ Expansion § Tech ○ Tech opportunities § Diversifying practice areas § Can increase market share
threats for dla
§ Competition with other firms § Covid ○ Maintaining a level of service ○ Money loss (with both clients and the firm) § Clients □ Managing expectations □ Bartering of fees □ Need to be sure that DLA are trusted by clients - many firms revert to the firm they trust in times of crisis
what is a warranty
§ Warranties - Awarrantyis a type of guarantee that a manufacturer or similar party makes regarding the condition of its product. Awarrantyis a promise of indemnity if the assertion is false.
why do people undertake m&as
increasing market share
§ Capturing synergies
§ Taking advantage of supply chain benefits
§ Diversifying products and or services
§ Increasing value to shareholders
issues arising in mergers
§ How might a minority shareholder be protected by a majority shareholder § Lacking motivation for acquisition § Targeting wrong company § Overpaying § Too extreme risks § Inadequate due diligence § Losing trust of important stakeholders § Failed integration
ebitda
o EBITDA = EarningsBeforeInterest (depends on financial structure),Taxes (depends on country of operation),Depreciation (decline of tangible fixed assets e.g. buildings, vehicles), andAmortization (decline of intangible assets e.g. patents)
○ EBITDA = net income + tax + interest expense + depriciation and amortisation
○ EBITDA = Operating Profit + Depreciation + Amortization
structure to m&a
o Corporate restructuring = changing structure of company to focus on more profitable areas or to increase money
§ 3 main models:
· asset acquisition - buyer buys assets of selling company
□ Can decide which assets to buy
□ High tax costs
· stock purchase - assets not directly transformed
□ Control of assets and liabilities = transferred
□ Low tax, less expensive, legal or financial liabilities
merger - two businesses combining
lawyers role in m&A
§ Negotiate and draft agreements § Due diligence - verifying information passed on § Arrange financing/investment § Completion of transaction § Post-completion procedures
m&a atm
§ M&A = strong in 2019
§ Shrink in M&A activity from covid - focusing on funds of own business
§ M&As postponed will hopefully help growth
§ Fear of tariffs
§ CMA has tightened merger control
· The EU has similarly adopted a harder enforcement line, with the proposed merger between Siemens AG and Alstom SA blocked by the Commission over concerns the deal would smother train-equipment market competition.
§ Movement away from carbon-strong mergers
· Royal Dutch Shell’s unsuccessful bid for Dutch renewable company Eneco in 2019 was a landmark moment; the likelihood of higher prices and/or a tax on carbon will aim to incentivise energy giants to alter their models.
