Identifying Concerns and Overcoming Risk in European MA Opportunities Marc Fredj Simmons Simmons...
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Identifying Concerns and Overcoming Risk in European M&A Opportunities Marc Fredj Simmons & Simmons Tel Aviv, Israel 16 June 2010 ACC ISRAEL ANNUAL CONFERENCE
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3 / Doc ID: ppt © Simmons & Simmons 2009 Identifying concern: Access to information Auctions vs exclusivity situations Private vs listed targets NDAs –Signatories –Vendor protection Timing of disclosure
Transcript of Identifying Concerns and Overcoming Risk in European MA Opportunities Marc Fredj Simmons Simmons...
Identifying Concerns and Overcoming Risk in European M&A Opportunities
Marc Fredj
Simmons & Simmons Tel Aviv, Israel 16 June 2010
ACC ISRAEL ANNUAL CONFERENCE
2 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Identifying Concern and Overcoming Risk
Identifying concern: Access to information
Identifying Concern: Due Diligence
Identifying Concern: Disclosure
Overcoming Risk: Conditions Precedent
Overcoming Risk: MAC Clauses
Overcoming Risk: Price Adjustments
Overcoming Risks: Earn Outs
Overcoming Risk: Indemnities
Overcoming Risk: Warranties
3 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Identifying concern: Access to information
Auctions vs exclusivity situations
Private vs listed targets
NDAs– Signatories– Vendor protection
Timing of disclosure
4 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Identifying concern: Due Diligence
General purpose
Specific purpose
Types of due diligence – coordinating
Scope
5 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Identifying concern: Due Diligence
Materiality
Vendor due diligence
Data Rooms
Communicating results
6 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Identifying concern: Disclosure
Legal duty – contractual obligation
General vs Specific
Fair disclosure
Qualifications (materiality, knowledge)
Management’s position
7 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Withdrawing from transaction
Pre-contractual stage:– good faith– break fees
Contractual stage:– conditions precedent (validity; benefit)
MAC Clauses
Breach of warranties
8 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Adjusting value
Price Adjustment:– price determinable– recourse to experts– recovery: claims, escrow, deferred payments
9 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Adjusting value
Earn Outs:– determination– neutralizing certain changes– tax treatment
10 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Allocating identified and unidentified risks
Weaknesses of legal protections:– misrepresentation– eviction– hidden defects
11 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Allocating identified and unidentified risks
Indemnities:– when to use– difference with warranties
12 / Doc ID: 8250499.ppt
© Simmons & Simmons 2009
Overcoming risk: Allocating identified and unidentified risks
Warranties– Scope– Indemnification:
– net assets– loss– beneficiary and tax impact
– Vendor protections
