Renewable Energy - M&A Terms (English) Flashcards
What is antitrust?
Legislation aimed at monopolisation and anti-competitive practices.
Trust: A group of companies who team up to limit competition and control price formation
What is rTSA?
Reserve transactional service agreement
Models for reinvestment
1) Cash
2) Daylight facility
3) Partial transfer/payment
4) Loan note -> Non-cash contribution
5) Loan note -> Debt conversion.
State pros and cons.
What is Texas Shoot Out / Russian Roulette?
A offers to sell his share of a company to B. If B declines to purchase A’s share, B has to offer A the opportunity to buy B’s share at the same price.
Often used in partnership exits
What is IRR?
Internal rate of return.
A metric used to calculate the yearly return on a (potential) investment.
What is LOI and what is it used for?
What is relevant to regulate in the LOI?
Letter of intent (LOI) documents a potential buyers intent to buy the company.
LOI is used, i.a., i) to convince the bank to finance the transaction, ii) to show other potential buyers that there are other interested buyers and iii) to support the sales price for the company
LOI often regulates: background and purpose for the transaction, the estimated purchase price, transaction structure, conditions and due diligence
What is de minimis, basket and cap?
De minimis refers to the minimum requirements for when a claim can be made.
Basket can be compared to own risk. The claims must collectively exceed the basket to be relevant.
Basking: From there
Tipping: TIp over when a certain amount is reached.
Cap referes to the maximum claim to be made under the garanties.
What is an NBI Report?
A report made by the broker that state offers from different insurance companies.
What is leveraged buyout?
Leveraged buyout/LBO refers to private equity funds’ acquisition of another company using primarily borrowed money (leverage).
What are drag-along rights and tag-along obligations
Drag-along refers to a clause in a agreement that enables the majority shareholder(s) to force minority shareholder(s) to sell their shares.
Tag-along refers to a clause in a agreement that enables the minority shareholder(s) to sell their shares if the majority shareholder(s) sell theirs. This right coutnerbalances the drag-along obligation.
What is price versus value
Price is what you pay and value is what you get
What is condition precedent
Condition precedent (CP) refers to a condition, event or state that must complied with before closing for the contract to be considered to be in effect.
What is a golden parachute?
Compensation to a director/key employee that had to be dismissed or lost responsibility in connection with an acquisition.
No multiple effect (SPA limitation)?
SPA limitation of liability where the loss of a seller must be summed up pound for pound without without regards to method for calculation of the purchase price.
Seller: The limitation of the purchase price for the buyer is irrelevant for seller. The loss must be summed up on the basis of the loss of the company and not the loss on the shares.
What is working capital?
The capital needed to maintain the day-to-day running of the company, including debtor, creditors and stock.
What is an underwrite and what role does this have?
The lawyer of the insurance company who examines the due diligence-reports and hold these against the guarantees to assess the coverage.
What is the effect of a specific indemnity?
The effect of a specific indemnity is to hold the issuer liable without fault and indemnify the other part.
What is a cartel?
An unlawful agreement between competing companies what limits competition in the market.
How do you structure a due diligence finding?
1) What is the problem?
2) What is the consequence?
3) How do we solve or manage the risk?