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The specialist in highly technical, market-driven banking and corporate finance training

Business Valuation Courses

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The specialist in highly technical, market-driven mergers & acquisitions training

Mergers & Acquisitions Courses

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PUBLIC COURSES

• Advanced Equity Valuation• Advanced Negotiation Issues in Financial Covenants• Advanced Negotiation Issues in M&A• Advanced Private Equity & Leverage Buy-Outs: A 5 Day

Masterclass• Advanced Private Equity & LBOs Training• Advanced Takeover Code - Current Strategies & Tactics• Bank Valuation• Corporate Finance Masterclass• Corporate Finance Transactions• Equity & Debt Capital Markets• Effective Business Writing for Corporate Finance• European Term Loan “B”• How to Buy A Business• How to Sell A Business• Introduction to The Takeover Code• Joint Ventures - Key Negotiating and Structuring Issues

with Sample Documents• Leveraged Loans in Private Equity and Corporate

Transactions• Negotiating Heads of Terms (LOI/MOU) & Related Issues

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PUBLIC COURSES

• Tax Issues in M&A• The M&A Course• Modelling for M&A Course• Private Equity & MBO• The SPA Course - Commercial Issues in Sale and

Purchase Agreements• Valuing a Business• Valuing Start Up and Pre IPO Companies• Valuing a Pharmaceutical Company• Valuing a Technology Company• Winning Coporate Finance Business• Due Diligence in Corporate Finance Transactions

IN-HOUSE COURSES

• Accounting for Business Combinations (M&A) Training• Advanced M&A Modelling: A Practice 3 Day Workshop• Financial Statement and Analysis: A 3 Day Course• IFRS Accounting for Transactions in Corporate Control • Banks Financial Statement Analysis - Basic• Banks Financial Statement Analysis - Advanced• Legal Due Diligence • Private Company Sales in the U.S and U.K• Public to Private Takeovers• The Distressed Disposals Training - The Key Negotiating

Aspects• Valuing Commodity Companies and Sectors• Warranties, Indemnities, Guarantees, Representations

Entire Agreement Clauses & Distinctions• Valuing Emerging Market Companies


Corporate Membership Scheme

Our Corporate Membership Schemes are not valid on any courses held on an in-house basis and are in line with our standard Terms & Conditions

If you would like to enquire about one of our Corporate Membership Schemes then please call or email us for more information.

Email: [email protected] Tel: +44 (0) 20 7387 4484

Our Corporate Membership Scheme gives clients the benefit of discounted course places with absolutely no

restrictions.

Clients pay an annual subscription fee of £595 + VAT to receive 20% discount on all public course and conference

bookings irrespective of the numbers booked.

You Corporate Membership Scheme can be used once payment is received and will be valid for one year.

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Advanced Equity ValuationDate: 06 Jun 2018, 17 Oct 2018

Location: London Standard Price: £695 + VAT Membership Price: £556 + VAT

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DCF and Multiple Valuation Reminder ■ Reminder of the five steps of DCF valuation ■ Review of trading multiples ■ Discussion of key issues affecting Terminal

Value, WACC and Enterprise Value to Equity reconciliation

Advanced DCF Valuation ■ Fast growing companies and the use of mul-

ti-period terminal value and fade rates • o Two-stage terminal value (grow-

ing annuity followed by a perpetuity growth rate)

■ Valuation of Net Operating Losses (NOLs) ■ Normalised steady-state cash flows to avoid

abnormal terminal value• Use of target RoIC vs. WACC returns

■ Effective and marginal tax rates ■ Mid-year discounting on cash flows ■ Flexible valuation dates

Case study I – Modelling of two-stage terminal value Modelling of NOLs, flexible deal dates and mid-year discounting

Weighted Average Cost of Capital (WACC) ■ Review of capital asset pricing mode (CAPM) ■ How to think about cost of equity for private

companies ■ How betas are derived – regressing compa-

ny and market returns ■ Which beta to choose for company valua-

tion? ■ Why unlever betas? How do we unlever

betas? ■ Use of Damodaran industry betas ■ Optimal capital structure and gearing risk

This training covers the more advanced areas of Equity Valuation. Participants discuss complex issues such as a two-stage terminal value, valuation of net operating losses, WACC for private companies and issues in the reconciliation between enterprise and equity value (associates, non-controlling interests, operating leases, pension deficits).

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to further enhance their understanding of valuation issues:

■ Building up from partially-complete models on real case scenarios

Each participant should bring a laptop to the course.

Case study II – Unlever and relever betas for a food manufacturing company

Enterprise Value to Equity Value Issues

Stock Options Expenses ■ Essentials of stock based compensation

accounting• Expensing to the income statement over

the vesting period ■ Intrinsic value of stock based compensation

• Treasury method of accounting for stock based compensation

■ Restricted stock and performance stock units

■ Multiples adjustments (EV/EBIT)• Fully diluted market capitalisation in EV• EBIT post stock option expense

■ DCF adjustments• Stock option expense to be included in

FCF• Diluted share count to compute equity

Case study III – Analysing the stock options of Linkedin

Non-Controlling Interests and Associates ■ Accounting for NCI ■ NCI valuation

• Book values• Market values• P / E multiples, Price to Book multiples

■ Adjustments of NCI to multiples (EV/EBIT)• Include NCI at market value in EV• EBIT to include both parents and NCI

earnings ■ Adjustments of NCI to DCF

• Deduct NCI at market value from EV to reach Equity

■ Accounting for equity affiliates / associates



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■ Equity affiliates and core, consolidated and total EV

■ Equity affiliate valuation • Book values/Market values/Multiples

■ Adjustments for equity affiliates to DCF and multiples• Depends on definition of EV (core, con-

solidated or total)

Case study IV – AB InBev and subsidiaries’ NCIAB InBev and Grupo Modelo as associate

Operating Leases ■ Differences between operating and financ-

ing / capital leases ■ Fundamentals of operating and financing /

capital lease accounting ■ Moody’s multiple method and present val-

ue of non-cancellable lease arrangements ■ Operating leases adjustments to multiples

• Capitalised operating leases to be added to EV

• Rental expense to be allocated between interest expense and depreciation

■ Operating leases adjustments to DCF• Free cash flow post rental expenses

■ New accouting rules to abolish difference operating vs. finance leases

Case study V – Computing Ryanair and Easyjet adjusted EV/EBIT

Pensions ■ Fundamentals of pension accounting ■ Defined benefit vs. defined contribution

plans ■ Funded vs. unfunded plans ■ Pension deficits and surpluses ■ Pension adjustments to multiples

• Add pension deficit to enterprise value• Only service costs to remain in EBIT

■ Pension adjustments for DCF• Only service cost in EBIT/free cash flow• Deduct pension deficit from EV to equity

Case study VI – Analyse the pension deficit of British Telecom


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Advanced Negotiation issues in Financial CovenantsDate: 26 Feb 2018, 12 Jun 2018, 24 Sep 2018


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The loan market in Europe has bifurcated into two main approaches to loan documentation; smaller club and bilateral deals on the one hand, which broadly follow the more lender-friendly LMA approach, and larger syndicated TLB-style deals on the other hand which are increasingly influenced by high yield bonds and invariably are structured on a cov-loose or cov-lite basis. These larger deals also include a far more eclectic approach to the key definitions comprising the ratios with many add-backs taken copied from high yield bonds.

This programme covers financial covenants in leveraged loans and real estate deals and includes specific reference and analysis of the covenants, terms and definitions in the LMA Senior Facilities Agreement for Leveraged transactions and LMA Real Estate precedents. The programme uses information from the Debt Explained database, to review the current trends in the market in the larger syndicated (TLB-style) deals which so often include springing leverage covenants and high-yield-bond style covenant packages.

The larger syndicated TLBs also vary in approach depending on whether they apply English law or NY law (for example, the latter do not usually permit overcures or require prepayment of loans from equity cure cash). Direct lenders, which typically use the LMA leverage precedent as a starting point, also tend to adopt a more borrower-friendly approach to the terms in the loan and the financial covenants.

Financial covenants are arguably one of the most heavily negotiated aspects of the Loan Agreement.

Too often; some parties fail to understand the key negotiating issues that really matter, for example they view the financial covenants in isolation rather than appreciating that they must be seen in the context of the particular capital structure. Secondly, too much time is spent on which covenants apply rather than focusing on the key constituents of the key terms in the financial covenant. Finally, many parties fail to appreciate that, even in cov-lite deals, the financial covenants and/or the components of those covenants play an important role as they also affect a wide range of other critical matters in the loan. This usually includes the various “permitted” actions such as debt incurrence (security and guarantees), sponsor payments, cash sweeps, guarantor coverage and grower, scalable and/or builder baskets where these appear.

This course provides a detailed look at commercial aspects of financial covenants and looks under the bonnet at the critical issues that arise in practice. It provides an in-depth look at the covenants as set out in the Loan Market Association precedent together with other covenants that might be used in practice. Reference is made to the Debt Explained loan database which tracks key terms in the larger syndicated TLB market.

Participants will gain an in-depth view of which covenants should be used together with a detailed analysis of the constituents of the covenants and the sponsor friendly add-backs and other sponsor friendly techniques used by borrowers to manipulate the covenants.

The programme will appeal to practitioners involved in leverage, real estate and infrastructure, such as Lawyers, Private Equity professionals, Bankers in Lending (all departments), Corporate financiers, M&A advisors, Debt advisory and Restructuring. Accounting professionals looking to expand their knowledge of this topic will also benefit as many of the issues embrace legal /documentary considerations. The programme adopts a pan-European approach to the topic but the presenter is able to discuss issues relevant in the USA in view of his exposure to those markets.

To derive full benefit from the programme, it is essential that attendees have a basic understanding of the main / headline elements of a Profit and Loss account (Sales, EBITDA, EBIT etc) and a basic understanding of the differences between P&L /Accrual Accounting and Cash accounting. It is emphasised that participants DO NOT require an understanding of IFRS or GAAP.

A short module summarising the key differences between P&L /Accrual Accounting and Cash Accounting is available on request prior to the programme.

The programme will review the draft ECB guidance on leveraged transactions published in November 2016. The course will examine which type of transactions are covered, which lenders are affected, the approach to EBITDA and the potential implications for players in the debt markets.Case Study: Participants will be required to:- (a) calculate how to derive the key elements of the various covenants (b) identify some of the more problematic components in the covenants (c) calculate the various covenants and (d) explain the pros and cons of each of the covenants and why they may be appropriate for one deal but not another. The calculations are relatively simple and are designed to explain the basic principles and reinforce learning.


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Advanced Negotiation issues in Financial CovenantsContinued...

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Introduction - Interaction of capital structure & financial covenants ■ Types of instruments & impact on the finan-

cial covenants ■ What is the purpose of financial covenants ■ Relevance of Capital Structure on Financial

Covenants• Bullet loans• Impact of PIK

■ How the lenders and borrwers approach setting the Financial Covenants

Key financial ratios used by Lenders and typical LMA ratios in leveraged deals ■ Market based financial ratios ■ The four LMA covenants in leveraged deals ■ Leverage ratios (Balance sheet and P&L

ratios)• Total Debt / EBITDA• Senior Debt/ EBITDA

■ Interest coverage ratios• EBITDA / Total interest • EBITDA / Senior Interest• EBITDA / Cash interest• [EBITDA – Maintenance Capex] / Cash

Interest ■ [EBITDA – Capex] / Cash Interest ■ Cash flow cover (DSCR)

• CADS / Total Debt Service• CADS / Senior Debt service

■ Capex covenant• LMA vs Market approach• Carry forward / carry back amounts -

LMA vs Market approach• Add-backs – LMA vs Market

Calculation of EBITDA and Cash flow ■ EBITDA

• Simplistic calculation of EBITDA• Consistency of application (Accounting

changes under IFRS, GAAP etc)• Exceptional items – LMA approach, UK

GAAP vs IFRS• Discontinued Operations – LMA, different

approaches of UK GAAP vs IFRS• Derivative & Financial Instruments - UK

GAAP vs IFRS• Pension Items - UK GAAP vs IFRS

■ Current trends affacting EBITDA (aggressive add-backs)• Anticipated synergies and cost reductions• What are the “typical” requirments for

“anticipated synergies”• Business optimisation expenses• Run-rate EBITDA – how is this calculated

■ Definition of “Cash flow”

• Typical adjustments• Sponsor friendly adjustments• Potential problems with “cash-flow”

Calculation of Debt and Borrowings and Finance Charges ■ “Total [Net] Debt” and “Senior Total [Net]

Debt”• “Borrowings” per the LMA• Simplistic calculation of Net Debt• Example of net debt items• Treatment of PE “Debt” • Vendor Loans – do they matter• Impact of Debt Buybacks and impact on

“Debt”• Treatment of “trapped” cash on Debt • What does “senior” only exclude?• What about PIK loans – should they be in-

cluded in Total Debt? ■ “Borrowings”

• Treatment of receivables• Redeemable shares• “Sweeper” clause

■ Finance charges & Net Finance Charges• Impact of “PIK” • Hedging impact

Finance Leases v Operating Leases – problem areas ■ Current approach ■ Impact of proposed changes to IFRS ■ Which sectors will be affacted by the changes ■ Potential problem areas (& solutions) with the

new regieme ■ Sectors posing particlar problems with operat-

ing leases

Current market trends ■ Key differences between large vs mid cap vs

smaller deals ■ Cov-lose

• Use and application• Typical ratios

■ Cov-lite• Use and application• Typical ratios

■ Springing Leverage covenants• When should the ratio spring• Calculating the constituents of the cove-

nants• When is the covenant tested• Potential problem areas

Application and compliance with the Financial Covenants ■ How many covenants are needed ■ Which companies should be included

• Definition of “Group”





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• Adjusted EBITDA (effect of acquisitions & disposals)

■ Dealing with “short” periods (i.e. less than 12 months post the deal)• Periods shorter than 12 months• Typical pitfalls to avoid

■ Frequency of application: When should the ratios be tested • Historic TTM/LTM, forecast, both (quarter-

ly, monthly)• 2 options per LMA

■ What level of “Headroom” is appropriate• What’s market• When and why does headroom matter

■ Impact of Clean-ups ■ The Compliance Certificate

• Typical requirements per LMA Sch 9 • Current commercial requirements• Traps for borrwers• When does the breach occur• Ramifications of the breach for Lender

(traps to avoid)

Equity cures ■ Equity cures - What are they, good or bad ■ What should be cured (EBITDA, Cashflow,

Debt) ■ Treatment of “overcures” ■ Is the cure EBITDA? And if yes what effect

will this have ■ How should the cash be used? (Why repay-

ment of debt is not appropriate) ■ Deemed cures – what are they and are they

worth having? ■ Review of recent lessons from Ideal Stand-

ard

Covenants used in Real Estate deals ■ The LMA financial covenants ■ Interest cover – constituents, pros and cons

• Historical • Projected

■ Key differences from the leveraged ratio• Calculation periods• “Passing Rental” – what is included and

what is excluded• Difficult / contentious aspects - break

clauses, non-rental income, costs/ex-penses

• “Finance costs” – treatment of hedging ■ Loan to Value

• Constituents, pros and cons• Items to be netted off

Impact of the Financial Covenants on other aspects of the loan facility ■ Aspects of the loan affected by Leverage

test• Margin ratchets• Cash sweeps• Debt incurrence (Incremental/Accordion

facilities) ■ Aspects of the loan affected by the defintion

of EBITDA• Material subsidiaries and their relvance• Guarantor coverage test

■ Impact and relevance on Grower, Sclable and Builder baskets• Key differences• Impact on and relevance to the loan facility

Draft ECB Guidance on Leveraged Transactions ■ Which lenders are affected ■ Which deals are affected ■ EBITDA calculation ■ Ramifications for market players

Appendices (Not covered in the course but included in an appendix the materials)

Overview of ratios used in Project finance / Infrastructure ■ Annual Debt Service Coverage ratio (“AD-

SCR”) ■ Loan/Bond Life cover ■ Project Life cover ■ Using the Buffer test




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Advanced Negotiation Issues in M&ADate: 24 May 2018, 17 Sept 2018, 29 Oct 2018

Location: London Standard Price: £795 + VATMembership Price: £636 + VAT

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Course Overview

This programme is aimed at those with a working knowledge of the M&A process. It focuses on negotiating the key commercial aspects of the transaction which impact value for both buyer and seller and on creating the right framework and strategy for enhancing value to the seller or retaining value for the buyer.

The simplistic view of M&A is that it is a bilateral process between buyers and sellers. Experienced practitioners understand it is an organic process, which involves multilateral negotiations between buyers/sellers on the one hand, and their respective advisers on the other hand. Additionally, there are critical negotiating issues that arise, in parallel, between the parties, their own advisers and between the advisors themselves (e.g. accountants debating the completion accounts, lawyers debating warranties in the SPA). To complicate matters, there are significant differences in approach between different types of sellers and buyers. For example corporates have a different agenda to PE firms whilst owner/managers, who invariably lack experience in M&A, often represent the biggest challenge. Last, the seller’s management can also have a malign influence on the sale process which requires delicate handling.

The programme is divided into two parts. The first part focuses on the soft negotiating issues which are common to smaller deals but less relevant in larger auctions. The second part focuses on the technical or commercial aspects where the real value can be gained or lost. These include the completion mechanisms (completion accounts and locked box), the offer structure (e.g. cash free-debt free and working capital adjustment), structuring the consideration, handling management and value leakage through the warranties, disclosure and indemnities.

Finally, warranty insurance, long seen as an expensive and cosmetic solution, is experiencing rapid acceptance in Europe and, increasingly, has emerged as a powerful negotiating tool. Last, the programme reviews various solutions to closing the “value gap” between the parties and the pros and cons of the various methods of achieving this.

Please note that this course covers some aspects that are also covered on the Sale & Purchase Agreements course although the focus in this programme is on commercial aspects as opposed to a more legalistic approach in the SPA course.

General guidelines for effective negotiating ■ 5 Key issues everyone should remember in

negotiating M&A ■ Why price isn’t everything (10 aspects af-

fecting the value) ■ The value matrix – building blocks of the

price ■ Reconciling price vs. value (strategy) –

what to look for ■ Three step approach to focus the negotia-

tions & avoid being side-tracked ■ The art of making concessions … how and

why they can help ■ 8 common mistakes in negotiating the deal

(& how to avoid them)

Specific matters re U.S. deals ■ Jurisdiction does matter (U.S. is a Federal

System)

■ Heads / LOI– different approaches in NY vs Delaware (good faith)

■ Different aproaches to Reps & Warranties ■ Different aproaches to Disclosure

Issues to consider with a Chinese buyer ■ Government & Regulatory issues ■ Cultural matters ■ Start small ■ Post Merger issues

Tactics for managing the advisors in the deal ■ Managing and choosing your advisors ■ Tips for handling your lawyers (and theirs) ■ Getting the best from the accountants ■ Managing the other party’s advisors

Managing the buyer and the sellers ■ Key differences in approach between corporate

buyers and PE firms ■ The “duty to negotiate in good faith”


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Advanced Negotiation Issues in M&AContinued

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• What it means in Europe and civil juris-dictions

• Key risk areas & how to mitigate them• Position in the UK (it’s not a liar’s char-

ter) ■ Buying from corporate sellers

• The agency cost issue & how it affects the deal

• Who is really running the deal? ■ Dealing with owner/ managers

• The psychology of buying from owner/managers

• How to overcome problems with (inex-perienced) advisors/lawyers

• How to differentiate your offer ... & close the deal

• Dealing with multiple sellers• Specific problems when buying minori-

ty/majority stakes

Managing conflicts with managers (who are not the owners) ■ Identifying the two major potential areas

of conflict and value erosion ■ Hijacking or sabotaging the deal – the 3

scenarios and strategies for managing them• Sweetheart deals - “typical” terms• Problem areas and how to mitigate

them (in advance)• Other strategies for handing recalcitrant

management ■ Managing the flow of information

• Interaction with seller liability?• Reverse warranties & side letters – do

they work?• Tactics for minimising seller’s risk

Structuring the Offer – impact on value & price ■ The basic Offer structure – cash free, debt

free & working capital/net asset value ad-justment

■ Analysis of the five key value drivers / are-as for due diligence & value• Cash, debt, working capital, capex and

EBITDA/cash run rate ■ Problematic areas and how to extract value

• The “trapped cash” problem• What is “debt”?

“Working capital” – why and how it matters ■ Two different approaches to completion:

Locked box vs Completion Accounts• How they can add / destroy value• When to use them and when to avoid

them – decision tree

• Key areas for negotiation

CASE: Identifying the key aspects affecting the reconciliation from Enterprise to Equity Value; techniques for estimating average and normalised working capital

Value Leakage: Reps, Warranties, Disclosure & Indemnities ■ Reps and warranties – what’s the difference &

why it matters? ■ Warranties - what are the main areas of risk ■ Disclosure – general tactics

• Dangers of too aggressive disclosure• Using disclosure to identify / mitigate risk

■ Indemnities - caps and collars ■ Tactics for limiting liability and value leakage

• Survival / time to assert claims & carve-outs

• Liability caps / baskets, de minimis & de maximis

Warranty Insurance … a powerful negotiating tool ■ Rapid evolution of the market in Europe ■ Seller vs buyer policies – key differences, pric-

ing and typical terms ■ Interaction with the warranties ■ How buy-side policies can help the seller ■ Where sell-side policies can provide leverage

Bridging the “Value Gap” on price ■ Cash - how much cash is too much? ■ Shares (listed)

• Use and application• Problems areas: market price, caps & col-

lars• Other pitfalls & how to avoid them

■ Vendor loans• Use and application• Pros and cons for sellers and buyers

■ Contingent value rights … undervalued tool ■ Stub equity – when to use it and why ■ Anti-embarrassment ... what is reasonable? ■ Consultancy agreements - Where and how

they can help ■ Earn-outs – a tool for value arbitrage

• Anatomy of an earn-out• Key negotiation issues• Typical pitfalls for buyer• Typical pitfalls for seller

CASE: Identifying the key issues in a tricky disposal, discussing how best to negotiate these with the other side and deriving the optimum deal structure in order to resolve the key issues to the benefit of both buyer & seller


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Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-ClassDate: 05-09 Feb 2018, 25-29 Jun 2018, 12-16 Nov 2018

Location: London Standard Price: £3,000 + VAT Membership Price:£2,400 + VAT

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The programme will review the impact of the draft ECB guidance on leveraged transactions.

This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue.

The third and final stage relates to liquidity events however PEs have the luxury in the current market of opting for soft as well as hard exits to generate value for LPs.

The programme adopts a pan-European approach to the topic but the presenter has experience of PE in other jurisdictions including, USA, Asia Pacific and Africa. Reference will be made to current trends and data in the markets across Europe.

Participants will be provided with numerous case studies to reinforce the various aspects and will also be provided with an LBO model which will be used to structure a transaction. Post the course participants will receive a number of other PE related models (e.g. how to calculate warrants and ratchets) as well as current review of debt trends in the debt market.



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Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

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Day 1

Introduction to Private Equity: The PE value creation model; PE fund structuresIntroduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs

USA• Financial assistance • Ranking & priority of senior vs junior

debt & pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an ap-propriate financial structure (overview)• Percentage senior, junior and equity in

debt capital structure• EBITDA multiples• Target returns for Private Equity & mez-

zanine funds ■ Deriving the funding structure

• Funding uses • Funding sources

Structure and key terms and trends for Private Equity funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How Private Equity fund structures optimise

value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation

can boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Comple-tion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit ■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management

Adding value: operating partner models



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Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

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Course Content

■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing re-turns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary

deals ■ Equity ratchets

• Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employ-ee, shareholder, warrantor

■ Key documents & terms• Shareholders’ agreement vs articles/ stat-

ues (pros & cons) ■ Critical issues in the investment agreement

• Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why

“fair value” is dangerous)• Transfer issues – drag, tag-along rights

■ Critical issues in the service agreement• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for borrow-

ers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference (main-

tenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they appeal

to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex




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Outs: A 5 day Masterclass

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and im-pact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s

objective ■ Step 2: Identifying the key requirements

for the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds• When and where to use junior debt

■ Step 4: Strategies for negotiating with lenders

■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues





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Advanced Private Equity & Leveraged Buy-outsDate: 05-07 Feb 2018, 25-27 Jun 2018, 12-14 Nov 2018

Location: London Standard Price: £1,800 + VATMembership Price: £1,440 + VAT

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Course Overview

The programme will review the impact of the draft ECB guidance on leveraged transactions.

This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue

Day 1

Introduction to Private Equity: The PE value creation model; PE fund structures

Introduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs USA• Financial assistance • Ranking & priority of senior vs junior debt

& pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an appro-priate financial structure (overview)• Percentage senior, junior and equity in debt

capital structure• EBITDA multiples• Target returns for Private Equity & mezza-

nine funds ■ Deriving the funding structure

• Funding uses • Funding sources


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Structure and key terms and trends for PE funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How Private Equity fund structures optimise

value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation can

boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Completion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the

correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit ■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap


Adding value: operating partner models ■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing returns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary deals

■ Equity ratchets • Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employee, shareholder, warrantor

■ Key documents & terms




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Advanced Private Equity & Leveraged Buy-outsContinued

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• Shareholders’ agreement vs articles/ stat-ues (pros & cons)

■ Critical issues in the investment agreement • Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why

“fair value” is dangerous)• Transfer issues – drag, tag-along rights

■ Critical issues in the service agreement• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for bor-

rowers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference

(maintenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they ap-

peal to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and impact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s ob-

jective ■ Step 2: Identifying the key requirements for

the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds

■ When and where to use junior debt ■ Step 4: Strategies for negotiating with lend-

ers ■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues





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Advanced Takeover CodeDate: 27 Apr 2018, 8 Nov 2018


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Course Overview

This course covers key rules in the Takeover Code regulating takeovers and the bid strategies and tactics that are used in the current marketplace.

The tactical advantage that possible bidders have had in takeovers has changed since the Code Review and the course examines the numerous effects this has had on bidder and target strategies.

Participants will learn how takeovers are conducted from the initial stages to the completion or lapsing of the bid and will gain an understanding of which strategies and tactics have and which have not worked, with examples from many recent deals.

The Takeover Code: Conduct of Offer ■ The UK takeover framework ■ Legal, UKLA and Code provisions

Key rules for the conduct of public bids ■ Announcements

• When possible/firm offer announcements are required

• Advisers’ responsibilities for announce-ments

• What is an untoward share price move-ment?

• Disclosures following announcements• Naming and Put Up or Shut Up• Contents of firm offer

■ Conditions/pre-conditions• When can they be subjective?• When can they be invoked?• What pre-conditions are possible in firm

offer announcements? ■ Minimum consideration following market

purchases ■ Restrictions

• No special deals • Management incentivisation in PTPs• Frustrating actions and exceptions

■ Squeeze out requirements ■ Overview of recent changes to rules ■ Types of takeover

• Offer statistics• Contractual offer timetable• How hostile offers are played out• Timetables in competitive situations• Development of Schemes of Arrangement• The rules for Schemes and timetable• Mandatory offer and whitewash require-

ments and uses• Partial and tender offers – rules and

when they are useful

Public Takeovers: Strategies and Tactics ■ Changes in marketplace which have affected

takeoversBidder Strategies and Tactics ■ Buying share stakes in Target

• Advantages of buying share stakes before and during bid

• Risks of buying stakes• Restrictions on stake-buying and regulatory

requirements • Methods of acquiring stakes• Is it worth holding a large minority stake?

■ Irrevocable undertakings• Advantages of holding irrevocables• Attitude of shareholders• Hard and soft irrevocables• Non-binding letters of intent

■ Impact of Code changes• Return to traditional bid approach• Effect of 28 day PUSU and naming• Work which needs to be done before ap-

proach• Friendly negotiations or hostile offer?• Possible offers and bear hugs

■ Timing considerations of firm offer announce-ments and bid • Issues if US shareholders are present

■ Structure: Scheme of Arrangements or Offer• Advantages and disadvantages compared to

contractual offer• Examples of Schemes/offers meeting share-

holder opposition• Examples of Schemes in competitive situa-

tions ■ Cash or share offer?

• Advantages/disadvantages of cash and shares

• Different mixes of consideration• Cash alternative structures• Other financing structures• Means of using foreign shares


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Advanced Takeover CodeContinued

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Course Content

■ Care with statements• Price and other future actions• Post-offer undertakings

■ Concluding the offer• When to increase offer• Are no increase / no extension state-

ments useful?

Target Strategies and Tactics ■ Basic arguments for defence ■ Directors and advisers’ responsibilities

in accepting/rejecting an offer ■ Measures before a bid

• Keeping close to market• Identification of stakes• Position of pension fund

■ Negotiate, open books or make possible offer announcement?• Effects of a possible offer announcement

and timing• Advantages of an auction• When should Target refuse to talk?• When to open up books?

■ Forecasts and undertakings• Profit/dividend forecasts• Restructuring and valuations• Share buy-backs and special dividends• What works best?

■ Pleadings ■ Anti-trust ■ White knight/squire ■ Bolster the board ■ “Get them before they get you”

Both Sides’ Strategies and Tactics ■ Conflicts of interest ■ Examining documents/statements ■ Financial and managerial arguments ■ Direct approach to shareholders/analysts

WHAT OUR CLIENTS ARE SAYING ABOUT THE COURSE:

“The trainer had a good knowledge of the code

& how the various takeovers have been implemented”

“The best aspect of the course has been the chance of having an experienced

professional as a trainer.”

“Good first-hand experience, practical real life examples & updates

of recent rules”

“The trainer had years of experience giving excellent overview of the code”

“Lead by an experienced market practitioner. Very interesting to hear deal experience of other

participants too”


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Bank ValuationDate: 18-19 June 2018, 25-26 Oct 2018


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Course Objectives

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to:

Review the accounting and valuation of banks’ financial statements including the loan book, financial instruments and deriva-tives used for hedging purposes;

Further advance participants’ understanding of the latest Basel III developments including MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR);

Understanding the key metrics to value a bank, including performing all the steps of a Dividend Discount Model (DDM) and Multiples Analysis using Excel.

Course Overview

Day 1

Session 1

The aim of this session is to provide participants with an understanding of the financial statements of a bank. The focus is on the banking book and financial instruments. The reporting and valuation of derivatives is also discussed. ■ Banks’ financial statements overview ■ Accounting for loans

• Non-performing loans • Understanding impairments vs. write-off • Incurred losses (IAS 39) has been re-

placed by expected losses (IFRS 9) ■ Accounting for financial instruments

• Lastest IFRS 9 implications: Amortised cost, FVTPL and FVTOCI

• Level 1, 2 and 3 valuations • Impairments of financial instruments

■ Accounting for derivatives • Hedge accounting: fair value, cash flow

and net investment • Netting derivative assets and liabilities

Case study: Barclays Financial Statements

Session 2 Fundamentals of Regulatory Capital Throughout this module, participants review the current regulatory requirements, in particular Tier I and Tier II capital ratios and understand detailed computations. ■ Overview of regulatory framework ■ Overview of Basel I, II and III and latest

Basel IV updates ■ Overview of calculating available and re-

quired capital• Common Equity Tier 1 (CET1), Tier 1,

Tier 2 and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, deferred tax, changes to investment portfolio, etc.

■ Overview of calculating risk weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk with the latest Basel IV requirements

- Standardised floor of 72.5% based on standardized approach - Simultaneous reduction in standardised risk weights for low risk mortgage loans ■ Overview of key capital, liquidity and funding

ratios• Tier 1 and total capital ratios• Leverage ratios• Liquidity coverage ratios (LCR) and Net

stable funding ratios (NSFR)

Case study: Barclays Regulatory Ratios Review

Day Two Session 3 Forecasting and Modelling Banks Based on the financial statements and publicly available regulatory information of Barclays, participants forecast its financial performance based on its historical statements. ■ Modelling and forecasting the balance sheet:

deposit or loan-driven? ■ The loan and trading book ■ Funing requirements and mix: deposit vs.

wholesale funding ■ Growth in funds under management ■ Modelling and forecasting the income state-

ment

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to: ■ Review the accounting and valuation of banks’ financial statements including the loan book,

financial instruments and derivatives used for hedging purposes; ■ Further advance participants’ understanding of the latest Basel III developments including

MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR); ■ Understanding the key metrics to value a bank, including performing all the steps of a Dividend

Discount Model (DDM) and Multiples Analysis using Excel.


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Bank ValuationContinued

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Course Content

■ Understanding the income statement drivers ■ Net interest income and margin ■ Non-interest income ■ Forecasting loan impairment through the

credit cycle ■ Operating costs ■ Tax ■ Modelling and forecasting regulatory capital ■ Risk weighted assets ■ Required and available capital under Basel I,

II or III ■ Liquidity requirements and stable funding

requirements ■ Forecasting dividends (payout ratio and/or

minimum capital requirement) ■ Ratio analysis and key performance ratios

Case study: Financial Modelling of Barclays on Excel

Session 4 Bank Valuation Following the forecasting of the bank’s performance, this session focuses on the Dividend Discount Model (“DDM”) and key multiples of Barclays. ■ Free cash flow to equity mode ■ Present value of future dividends ■ Cost of equity for banks ■ Terminal value: review of potential ap-

proaches (key parameters or RoE) ■ Sensitivity analysis ■ Banking trading multiple

• P/BV and adjustment to BV explained• P/E, dividend yield

Case study: DDM and Multiples of Barclays on Excel


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Corporate Finance MasterclassDate: 04-06 Jun 2018, 15-17 Oct 2018

Location: London Standard Price: £1,995 + VAT Membership Price: £1,596 + VAT

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Course Objectives

Course Overview

This programme has been designed to develop the participants’ understanding of Corporate Finance gradually over a three-day period. Participants are welcome to attend all or part of the gradual steps of the training depending on their business needs. Day 1 – Corporate Finance Transactions During the first day, participants are introduced to the main transactions in Corporate Finance: Mergers & Acquisitions (M&A), including buy-side and sell-side transactions, equity and debt financing and Leveraged Buy-Out (LBO). The steps in an M&A process are explained in detail alongside due diligence and synergies. Key metrics in M&A analysis, including accretion/dilution, pro forma leverage, synergies paid away are discussed based on real life case studies. Participants then learn the key characteristics and players of an LBO and go through its financing structures. Day 2 - Equity & Debt Capital Markets Participants start by covering the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation. Finally, participants will cover the main debt products available to corporates. The bond issuance process and key documentation are discussed. Both long and short term, and public and private financing options are explained. Day 3 – Advanced Equity Valuation Methodologies Following the initial valuation methodologies, participants will move, during the second day, to more advanced business valuation concepts. Participants will discuss complex issues such as a two-stage terminal value, valuation of net operating losses, WACC for private companies and issues in the reconciliation between enterprise and equity value (associates, noncontrolling interests, operating leases, pension deficits). Much of the course work involves Excel modelling and analysis, equipping participants with the tools to further enhance their understanding of valuation issues: ■ Building up from partially-complete models on real case scenarios

Each participant should bring a laptop to the course to facilitate modelling work.

DAY ONE Corporate Finance Transactions ■ Review of main Corporate Finance

transactions • Buy-side and Disposals • Fairness opinions • Leveraged Buy-Out (LBO)/Management

Buy-Out (MBO) • Initial Public Offering (IPO) and second-

ary issuance • Debt financing

■ Advisers and their roles Mergers & Acquisitions ■ M&A trends: volume, industries, actors in the

US, Europe and China ■ Buy-side and sell-side ■ Type of transactions

• Auction/Competitive process/Bilateral ne-gotiation

■ Timetable and process ■ Due Diligence

• Due diligence as deal breaker or deal ad-justers

• Private vs. listed companies


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Corporate Finance Masterclass BOOK NOW

■ Synergies • Types of synergies: cost and revenues • Phasing and initial restructuring costs

■ Basic documentation review • Letter of intent • Key clauses of sale and purchase agree-

ment Case Study I: Participants anlayse existing M&A transactions in the steel and industrial sectors

M&A Financial Analysis ■ Review of key financial metrics in M&A

• EPS accretion/dilution • Ownership dilution • RoIC vs. WACC • Pro forma leverage • Net present value of synergies vs. con-

trol premium ■ Calculating goodwill ■ Dealing with fair value adjustments to the

target’s net assets ■ Refinancing of target’s debt ■ Fees (advisory, debt-issuance and equi-

ty-issuance) ■ Identifying the maximum offer price and a

suitable financing mix Case Study II: Participants analyse the acquisition of a food manufacturer on Excel

Leveraged Buy-Out (LBO) ■ LBO trends: volume, industries, actors in

the US, Europe and China ■ General overview of a levered transaction:

basic principles ■ Drivers of value creation in a levered trans-

action • How leverage increases the return on

equity • What makes a good LBO candidate

■ The concept of cash flow lending • The lender’s perspective: risk, return and

exit routes ■ Structural subordination ■ Financial instruments used in levered trans-

actions • Senior debt (revolving facility, term A,

term B, term C) • Second lien • Mezzanine loans • High yield bonds and PIK notes • Preferred shares, shareholder loans,

vendor loan notes Case Study III: Participants perform the LBO of a cloud computing company

DAY TWO Capital Markets Fundamentals ■ What financial markets do? ■ Who are the major players? ■ Domestic and international capital markets ■ Debt versus equity ■ Primary versus secondary market ■ Distinguishing between retail, corporate

and investment banking ■ Buy side versus sell side ■ League tables, equity & debt underwriting ■ Loan and bond markets ■ Corporate advice and finance ■ Where transactions take place: Exchanges

vs. OTC vs. ECNs ■ The buy-side industry/investors ■ Active vs. passive investment management ■ Asset allocation

Equity Capital Markets ■ ECM and IPO trends: volume, industries,

actors in the US, Europe and China ■ The corporate lifecycle and equity financing

options ■ ECM role and fees ■ Initial public offering

• Process • Prospectus • Book building and arriving at a price • Quiet period • Stabilization and greenshoe option

■ IPO modelling with pre and post offering ■ Secondary offering

• Follow on placements • Right issues • Accelerated book building • Modeling a follow on placement

■ Share classes • Different classes • Preference shares • Pricing • Issuing shares in different markets • Modelling different classes of shares

■ Listing rules • Key rules in main equity markets • Minority squeeze out • Compulsory purchase

Debt Capital Markets ■ The corporate lifecycle and debt financing

options ■ Bond issuance process

• Due diligence• Prospectus • Roadshow • Syndicate and bond allocation• Market making and after-market

■ Short-term debt funding • Overdraft/ Revolving credit facility/Com-

mercial paper






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Corporate Finance MasterclassContinued...

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■ Long- term debt funding • Bank debt • Publicly issued bonds

Case Study II: Participants analyse the recent apple bond issuance, term sheet and prospectus DAY THREE DCF and Multiple Valuation Reminder ■ Reminder of the five steps of DCF valuation ■ Review of trading multiples ■ Discussion of key issues affecting Terminal

Value, WACC and Enterprise Value to Equity reconciliation

Advanced DCF Valuation ■ Fast growing companies and the use of mul-

ti-period terminal value and fade rates • Two-stage terminal value (growing annui-

ty followed by a perpetuity growth rate) ■ Valuation of Net Operating Losses (NOLs) ■ Normalised steady-state cash flows to avoid

abnormal terminal value • Use of target RoIC vs. WACC returns

■ Effective and marginal tax rates ■ Mid-year discounting on cash flows ■ Flexible valuation dates

Case study I – Modelling of two-stage terminal value - Modelling of NOLs, flexible deal dates and mid-year discounting Weighted Average Cost of Capital (WACC) ■ Review of capital asset pricing mode (CAPM) ■ How to think about cost of equity for private

companies ■ How betas are derived – regressing compa-

ny and market returns ■ Which beta to choose for company valua-

tion? ■ Why unlever betas? How do we unlever be-

tas? ■ Use of Damodaran industry betas ■ Optimal capital structure and gearing risk

Case study II – Unlever and relever betas for a food manufacturing company Enterprise Value to Equity Value Issues Stock Options Expenses ■ Essentials of stock based compensation ac-

counting • Expensing to the income statement over

the vesting period ■ Intrinsic value of stock based compensation

• Treasury method of accounting for stock based compensation

■ Restricted stock and performance stock units ■ Multiples adjustments (EV/EBIT)

• Fully diluted market capitalisation in EV• EBIT post stock option expense

■ DCF adjustments • Stock option expense to be included in FCF • Diluted share count to compute equity

Case study III – Analysing the stock options of Linkedin

Non-Controlling Interests and Associates ■ Accounting for NCI ■ NCI valuation

• Book values • Market values • P / E multiples, Price to Book multiples

■ Adjustments of NCI to multiples (EV/EBIT) • Include NCI at market value in EV • EBIT to include both parents and NCI earn-

ings ■ Adjustments of NCI to DCF

• Deduct NCI at market value from EV to reach Equity

■ Accounting for equity affiliates / associates ■ Equity affiliates and core, consolidated and

total EV ■ Equity affiliate valuation

• Book values/Market values/Multiples ■ Adjustments for equity affiliates to DCF and

multiples • Depends on definition of EV (core, consoli-

dated or total)

Case study IV – AB InBev and subsidiaries’ NCI AB InBev and Grupo Modelo as associate

Operating Leases ■ Differences between operating and financing /

capital leases ■ Fundamentals of operating and financing /

capital lease accounting ■ Moody’s multiple method and present value of

non-cancellable lease arrangements ■ Operating leases adjustments to multiples

• Capitalised operating leases to be added to EV

• Rental expense to be allocated between interest expense and depreciation

■ Operating leases adjustments to DCF • Free cash flow post rental expenses

■ New accouting rules to abolish difference op-erating vs. finance leases

Case study V – Computing Ryanair and Easyjet adjusted EV/EBIT






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Pensions ■ Fundamentals of pension accounting ■ Defined benefit vs. defined contribution

plans ■ Funded vs. unfunded plans ■ Pension deficits and surpluses ■ Pension adjustments to multiples

• Add pension deficit to enterprise value • Only service costs to remain in EBIT

■ Pension adjustments for DCF • Only service cost in EBIT/free cash

flow • Deduct pension deficit from EV to eq-

uity Case study VI – Analyse the pension deficit of British Telecom





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Corporate Finance TransactionsDate: 04 Jun 2018, 15 Oct 2018


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The participants are introduced to the main transactions in Corporate Finance: Mergers & Acquisitions (M&A), including buy-side and sell-side transactions, equity and debt financing and Leveraged Buy-Out (LBO).

The steps in an M&A process are explained in detail alongside due diligence and synergies. Key metrics in M&A analysis, including accretion/dilution, pro forma leverage, synergies paid away are discussed based on real life case studies. Participants then learn the key characteristics and players of an LBO and go through its financing structures.

Section 1 – Corporate Finance Transactions ■ Review of main Corporate Finance transac-

tions • Buy-side and Disposals • Fairness opinions • Leveraged Buy-Out (LBO)/Management

Buy-Out (MBO) • Initial Public Offering (IPO) and secondary

issuance • Debt financing

■ Advisers and their roles Section 2 – Mergers & Acquisitions ■ M&A trends: volume, industries, actors in

the US, Europe and China ■ Buy-side and sell-side ■ Type of transactions

• Auction/Competitive process/Bilateral negotiation

■ Timetable and process ■ Due Diligence

• Due diligence as deal breaker or deal adjusters

• Private vs. listed companies ■ Synergies

• Types of synergies: cost and revenues • Phasing and initial restructuring costs

■ Basic documentation review • Letter of intent • Key clauses of sale and purchase agree-

ment

Case Study I: Participants anlayse existing M&A transactions in the steel and industrial sectors

Section 3 – M&A Financial Analysis ■ Review of key financial metrics in M&A

• EPS accretion/dilution • Ownership dilution • RoIC vs. WACC • Pro forma leverage • Net present value of synergies vs. control

premium ■ Calculating goodwill ■ Dealing with fair value adjustments to the

target's net assets ■ Refinancing of target's debt ■ Fees (advisory, debt-issuance and equity-issu-

ance) ■ Identifying the maximum offer price and a

suitable financing mix Case Study II: Participants analyse the acquisition of a food manufacturer on Excel

Session 4 – Leveraged Buy-Out (LBO) ■ LBO trends: volume, industries, actors in the

US, Europe and China ■ General overview of a levered transaction:

basic principles ■ Drivers of value creation in a levered transac-

tion • How leverage increases the return on equi-

ty • What makes a good LBO candidate

■ The concept of cash flow lending • The lender’s perspective: risk, return and

exit routes ■ Structural subordination ■ Financial instruments used in levered transac-

tions • Senior debt (revolving facility, term A, term


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B, term C) • Second lien • Mezzanine loans • High yield bonds and PIK notes • Preferred shares, shareholder loans,

vendor loan notes

Case Study III: Participants perform the LBO of a cloud computing company


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Equity & Debt Capital MarketsDate: 05 Jun 2018, 16 Oct 2018


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Participants start by covering the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation.

Finally, participants will cover the main debt products available to corporates. The bond issuance process and key documentation are discussed. Both long and short term, and public and private financing options are explained.

Session 1 – Capital Markets Fundamentals ■ What financial markets do? ■ Who are the major players? ■ Domestic and international capital markets ■ Debt versus equity ■ Primary versus secondary market ■ Distinguishing between retail, corporate

and investment banking ■ Buy side versus sell side ■ League tables, equity & debt underwriting ■ Loan and bond markets ■ Corporate advice and finance ■ Where transactions take place: Exchanges

vs. OTC vs. ECNs ■ The buy-side industry/investors ■ Active vs. passive investment management ■ Asset allocation

Session 2 – Equity Capital Markets

■ ECM and IPO trends: volume, industries, actors in the US, Europe and China

■ The corporate lifecycle and equity financing options

■ ECM role and fees ■ Initial public offering ■ Process ■ Prospectus ■ Book building and arriving at a price ■ Quiet period ■ Stabilization and greenshoe option ■ IPO modelling with pre and post offering ■ Secondary offering

• Follow on placements • Right issues • Accelerated book building • Modeling a follow on placement

■ Share classes • Different classes • Preference shares • Pricing

• Issuing shares in different markets • Modelling different classes of shares

■ Listing rules • Key rules in main equity markets • Minority squeeze out • Compulsory purchase

Case Study I: Detailed review of the Facebook IPO

Section 3 – Debt Capital Markets

■ The corporate lifecycle and debt financing options

■ Bond issuance process • Due diligence • Prospectus • Roadshow • Syndicate and bond allocation • Market making and after-market

■ Short-term debt funding • Overdraft/ Revolving credit facility/Com-

mercial paper ■ Long- term debt funding

• Bank debt • Publicly issued bonds

Case Study II: Participants analyse the recent apple bond issuance, term sheet and prospectus


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Effective Business Writing for Corporate FinanceDate: 05 Mar 2018, 19 Sep 2018


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Course DescriptionThis training is focused on acquiring the skills to write an effective business report for Corporate Finance and Mergers & Acquisitions professionals.

Upon completion of this intensive one-day course, participants will be able to: ■ Understand the key sections of a business report; ■ Learn how to juggle with and summarize tons of data; ■ Write a powerful, straight-to-the point business report; ■ Feel more comfortable presenting their findings to a senior audience.

Course Overview

Course Methodology

The course will be delivered in a highly interactive, participative way, involving many activities and exercises, thereby ensuring maximum learning and integration of the learning points into the workplace, when the participants return to their daily roles.

Introduction ■ What are the key skills of business writing? ■ Write with the reader in mind ■ Summarising data in a concise manner ■ Structure and organise your report ■ The “so what?” test

Business Reports ■ What are the different types of business

reports in Corporate Finance? ■ A Corporate Finance marketing presentation ■ An investment appraisal for a private equity

firm ■ An information memorandum on a potential

target ■ A presentation on financing needs for an

acquisition

Case Study I: Several Corporate Finance business reports are presented to participants to identify best practises

■ Key sections• Executive summary• Key trends• Current situation assessment• Analysis of potential solutions/key consid-

erations • Valuation analysis and financing consider-

ations• Conclusion and next steps

Tips for Writing Effective Corporate Finance Reports ■ Report vs. essays

• Focus on the key financing and strategic information through bullet points

• Each bullet needs to make a point and pro-vide a message

• Reader often senior management, board-level

■ Planning & organizing the Corporate Finance report• What are the key messages underlying

your M&A or financing storyline• What are the key sections and sub-sec-

tions? ■ Achieving a logical structure and sequence

• Start with the executive summary• Use of headings, sub-headings, sections,

subsections and numbering• Logical connection between ideas• Focus on topic sentences (first sentence of

each paragraph)• Sections should lead naturally into the

next ■ The executive summary

• Consistent with the Corporte Finance anal-ysis being presented

• Exciting enough to read the details• Should stand on its own even if you hav-

en’t read the original report• Should define the problem clearly and

present solutions ■ Avoidance of repetition

• Double-check section and sub-section headers

• Ask yourself on each sentence: is this al-ready mentioned elsewhere?

• Make sure your work is diverse at every level

■ Cross-referencing• Consistency in numbers and financial anal-

ysis throughout


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• Source all data & information provided• Use consistent format - fonts and color

palette ■ Using an appropriate style of writing

• Concise, relevant accurate, descriptive vs. analytical etc

• Word choice, sentence fluency, and writ-er’s voice

■ Use of data• Choose powerful graphs & tables• Balance proportion of charts & texts• Data should reinforce the page message

■ Use of appendices• Show completeness and seriousness• Graphs and tables of secondary impor-

tance• Sensitivities on key results & analysis• Listing of all sources

■ Use of drafts ■ Report writing with multiple authors

Case Study II: Overview of well-written vs. badly written reports; practice of writing sections of a business report

Final Case Study

Participants are split into groups of 3 to 4 professionals. Participants are asked to write a brief 2-3 pages investment memorandum on a potential business acquisition and related financing.

The participants are given numerous analysis and documents regarding a European company, including;

■ Business profile; ■ Description of the industry and sector out-

look; ■ Financial statements and business fore-

casts; ■ Financing considerations.

Each group will present and defend their findings in front of the classroom. A full debriefing on each group’s presentations will then take place.


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European Term Loan “B”Date: 02 Feb 2018, 26 Sep 2018

Location: London Standard Price: £725 +VAT Membership : £580 +VAT

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■ ■

The European leveraged loan market saw issuance rise to €135 billion (an 85% increase vs the corresponding prior period) significantly outpacing high yield bond issuance of €86.8 billion. This trend is expected to gather pace in 2017 as issuers, particularly PE sponsors, appear set to prefer loans over bonds for a number of reasons. First, loans are currently enjoying lower spreads (E+350 + 0% Floor) than bonds (c. 6.6% all in); second, loans offer greater flexibility to sponsors in terms of the ability to both refinance (q.v. Flint Group, Cooper, B&B Hotels) and reprice existing facilities (q.v. Douglas €1.37 Term Loan “B”) whilst offering sponsors enhanced flexibility (and lower cost) in terms of their exit options.

Most, if not all, of the syndicated loans and many of the larger club deals (e.g. Independent Vetcare’s £180m Term Loan “B”) bear little resemblance to the traditional LMA precedents and include many features imported from high yield bonds or New York-style credit agreements (e.g. grower and builder baskets which apply inter alia to; debt incurrence, liens/collateral, restricted payments). The high yield bond and leveraged loan markets have been converging for some years (indeed the trend in Europe stared before the credit crisis with the arrival of the first cov-lite deals) but this convergence accelerated in 2016 in the face of the continuing benign conditions in credit markets caused by an imbalance of demand and supply and magnified by QE as well as the preference for increasingly influential U.S. lenders and sponsors for (more familiar) U.S. style documentation.

Whilst these Term Loan “B”s share many common features there are significant and subtle variations between them such that European Term Loan “B” market has fragmented into four different “styles”; first, English law cov-lite Term Loan “B” (typically for larger and better credits); secondly, English law covenanted Term Loan “B”s (typically or smaller or less attractive credits); thirdly, New York cov-lite Term Loan “B” and finally, High Yield style Senior Secured Term Loan “B”s generally used for very large transactions. The course will refer to current trends in the market by referring to the DebtXplained Loan Database which tracks the key terms in these Term Loan “B”s; including restrictions on transferability, MFN and sunset periods, equity cures.

The programme will appeal to practitioners involved in larger leveraged loan market such as lawyers, bankers in lending, PE professionals, corporate financiers, M&A advisors, debt advisors and restructuring. Investors in larger loans and direct lending will also benefit from an understanding of these topics since some of these features have begun to appear in much smaller deals (e.g. grower baskets in deals sub €50m).

Course Overview

■ ■


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Key concepts ■ Different variations of European Term Loan

“B”• English law Term Loan “B”• New York law Term Loan “B”• European “high-yield” style Term Loan

“B” ■ The Restricted Group

• Inclusions and exclusions• Approach used in high yield bonds &

why it matters• Re-designation of subsidiaries to and

from the Restricted Group• Typical requirements

■ Material subsidiaries• What constitutes at material subsidiary

– market approach to the threshold %• The various tests: EBITDA and other

approaches• Relevance and application in the SFA• Date and manner of determination-

Certificate (LMA vs market approach) ■ Information and financial reporting ■ Term Loan “B” vs LMA approach

• Treatment of unrestricted group• Presentations• Access rights•

A word about baskets ■ Use and application ■ Key variables and their ramifications

• Lender vs Borrower friendly ■ Fixed baskets

• Life time vs annual limit• Carry forward and back

■ Grower• Application • Key variables

■ Application • Key variables • Scalable

■ Builder• Application • Key variables

■ Are baskets refillable, can amounts be split, restrictions

Case: review of use and application of different types of baskets

Voting thresholds, Amendments & Waivers ■ LMA / EUK thresholds vs NY style thresh-

olds

■ Majority lenders ■ Super-majority

• Thresholds • Typical matters

■ Entrenched rights • “Unanimous” consent? - Typical matters

■ Facility change / Structural adjustments (or equivalent)• Approval Requirements• Major vs minor vs payables• Matters affected

■ Snooze you lose – timing ■ Yank the bank

• Required consent threshold• Non-consenting trigger• Can non-consenting lenders be prepaid

or bought at par• Required ource of funds

■ Debt buy-backs• Permitted• Cap on amount• Disenfranchisement

Yield / Margins, Ratchets & Call protection & Hedging ■ Trends in LIBOR/Euribor floors

• Differences in NY law vs English law• Matters affecting the Floor

■ OID – market trends ■ Margin ratchets

• Incidence – Application to facilities & step downs

■ Commitments fees on RCFs etc ■ Call protection

• Application & Scope - Repricing Events• Specific carve-outs (Specifc Asset Sales

or Significant Acquisitions, CoC, IPO, EBITDA increase, other)

• Basis of calculation of the Call protec-tion (effective yield)

■ Hedging required

Permitted Acquisitions & Investments ■ Structure of ‘Permitted” acquisitions ■ Permitted Acquisitions – LMA vs Term Loan

“B” approach ■ Ability to acquire Majority interests & ap-

plicable requirements/ conditions• Type and structure of basket lifetime or

annual limit • Typical tests & thresholds• Similar or complemetary business• Leverage test applicable to Target• Due diligence requirement - Third party

/ Independent certification





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• Other restrictions (jurisdiction) ■ Treatment of pro-forma synergies

• Can management add synergies to the test

• What synergies qualify, time limits? ■ Limits on non-guarantor entities ■ Must target accede to the collateral pack-

age ■ Ability to acquire minority stakes

• Applicable requirements/ conditions

Permitted Asset Sales ■ Requirements for assets sales ■ Threshold amount ■ Nature of the consideration received ■ Other requirements ■ Fair market value – certificates? ■ Payment waterfall & de minimis amounts

Debt incurrence ■ Incremental / additional debt generally

• “Accordion–style” facilities• Permitted Alternative debt

■ Structure of incremental debt basket• Ratio debt vs hard vs soft caps• Grower cap• Ratio & hard cap• Hard and grower caps• High Yield Bond style

■ Accordion facilities • Terms and conditions

■ Intercreditor accession ■ Types of debt baskets

• Free and clear baskets• General basket • Acquired debt basket• Acquisition debt basket• Contribution debt basket

Case: review of use and application of different approaches to incremental (and accordion) debt

MFN & Sunset provisions that relate to Incremental Facilities ■ MFN provisions – scope

• Incidence in deals• Scope – application to specific facilities• Method – margin cap vs all-in-yield

cap• Other requirements and exclusions • Structuring the yield cap to avoid be-

ing gamed by borrowers• Issues for lenders

■ Sunset provisions• Incidence • Duration• Effective date?• Differences in NY law vs English law

Case: review of approach to MFNs and sunset provisions

Restricted payments (Distributions) ■ Permitted / Restricted Payments General

Basket(s)• Hard vs soft caps• “Source of funds” condition• “Builder basket” approach

■ Investor Payments Leverage Basket• Typical range

■ Available Amount (“AA”) / Cumulative Credit (“CC”) - Leverage compliance test

■ Investor payments - Leverage Basket Fund-ing Sources (other than AA/CC)

■ Other conditions for Investor Payments Lev-erage Basket (other than AA/CC)

Sponsor fees & Sub-debt payments ■ Types of fees and their caps

• Holding Co / Admin fees• Sponsor / Monitoring fees• Advisory fees• Other material fees• Parent Debt Servicing / Fees/ Expenses

■ Aggregate of hard capped equity and sub debt related payments• Equity repurchases• Employee benefits

Negative Pledge, Permitted liens / security ■ Can incremental debt be secured & if so

what assets are available• Existng collateral• No colateral assets• Non-Guarantor Restricted Subsidiaries• Restrictions on securing incremental debt

■ Availability of general and other baskets ■ Hard vs soft “grower” permitted lien baskets ■ Intrecrediotr accession

Mandatory prepayments (Cash sweeps) ■ Excess cash

• Opening percentage• Step down • Step down mechanism – linear or stepped

■ IPO• Applicable repayment percentage





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■ [Available amount vs Cumulative Credit basket]

■ The five main basket combinations ■ CNI and “out of the box” amount ■ Build up basket start date – when does

this start? ■ Ratio test

• Leverage• FCCR• Other

■ Change of control• Is this treated as an EoD or mandatory

prepayment• Six approaches – automatic exit, Lender

has option etc

Transferability & Portability ■ Transferability

• Whitelists • Approved lenders• Blacklist / Disqualified Institutions List

present• Specific affected parties

■ Industry competitors ■ Loan to own investors

• Consent, Demmed consent & “Resona-blnesss requirement

• Consultation • Carve-outs• Minimum transfer & hold sizes – inter-

action with Related/ Exisiting lenders ■ Matters affceting the RCF ■ Portability

• Ratings test• Ratio - Leverage or Enterprise value

ratio ■ Timing periods/limits & Frequency ■ Additional requirements

Financial maintenance covenants & covenant suspension

■ Financial covenant package type ■ Review of current market approach: Tradi-

tional vs Cov-lose vs Cov-lite ■ “Springing” leverage covenants

• What are they• Typical terms

■ Aggressive add-backs to EBITDA• Synergies and other add-backs• Por-forma ajustments - Scope• •dditional requirements and time limits

■ Equity cures • Current market approach – what can be

cured; how often, over-cures?• Deemed cures – what are they and are

they widely used ■ Deal outliers

• Introduction of minimum EBITDA cove-nant

• Maintenance covenants tested at great-er intervals

■ Covenant suspension• Trigger• Availability and scope

Case: review of Equity cures

Guarantor coverage ■ Incidence of guarantor coverage ■ GCT percentage (where present) ■ Exclusion of Material subsidiaries & mate-

riality threshold ■ Other market exclusions ■

Events of Default ■ LMA EoDs and typical market exclusions ■ Clean-up period ■ Cross-default or cross-acceleration ■ Right to accelerate ■ Grace periods

• Non-payment• Other obligations• Commencement of grace period

■ MAC• Review of market variations




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How to Buy a Business - A Practitioner’s GuideDate: 15 May 2018, 22 Oct 2018


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Creating shareholder value through the pursuit of a successful M + A strategy has been shown to be a far from risk-free activity. Buyers overpaying or using inappropriate financing methods can lead to destruction of value and in some cases financial distress.

The course covers topics of risk and return, process, investigation and integration as a practical guide to identifying and negotiating acquisitions.

The Drivers of Growth ■ Shareholder value ■ The company life cycle

• The importance of directors recognising the value curve

■ Risk and return• Relating risk to the life cycle phase of the

company / target ■ Product market growth and decline

• Evaluating niches, substitutes, value in innovation

REVIEW: Comparison and contrast of the lifecycle of three different companies, highlighting how success or failure with acquisitions has determined their fate

■ ICI ■ Debenhams ■ GKN

Growth through Acquisition ■ Assessing the alternatives

• Investment• JV• Acquisition•

DISCUSION: Advantages and disadvantages of each approach

Determining the acquisition• Market objectives

ӹ Consolidating a fragmented market ӹ Building the value proposition

• Management issues ӹ Assessing cultural fit

• Price parameters ӹ Knowledge of comparative deals

Opportunity cost ӹ Is it a “now or never” deal

REVIEW: The Ansoff Matrix, a handy way to categorise potential risks in acquisition strategies

■ Pitfalls to avoid • Realism of synergies

ӹ Risks of prediction, cost and achievement• Accounting standards

ӹ Who is the auditor, what principles are followed

• Judging forecasts ■ Scepticism rules

Commercial factors • Target’s history• Recurring revenue• Intellectual property• Customer list

CASE STUDY: Reviewing company information to arrive at a value, taking into account qualitative and strategic factors

The Acquisition Process ■ Establishing acquisition criteria

• Target size and affordability • Potential synergies• Market / competitor impact• Regulatory factors• Shareholder impact

■ Due Diligence • Investigation prior to offer

ӹ Public sources ӹ Private sources

■ Verification• Contracts• Accounts• Pensions• Employee disputes• Litigation

CASE STUDY: Reviewing summary information on a company to determine which areas need investigation and who should have responsibility for the task

■ Structuring the deal • Earn-out / deferred consideration• Non-compete undertakings • Warranties and indemnities • Disclosure letters

Acquisition Integration ■ Success / failure factors ■ The importance of the integration team ■ Earn outs and accounting issues ■ Incentivising key managers ■ Establishing clear reporting lines


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How to Sell a Business - A Practitioner’s GuideDate: 16 May 2018, 23 Oct 2018


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Course Overview

Selling a company to achieve a vendor’s target price is frequently a time-consuming and complex process. In addition to the legal and accounting considerations there are issues of presentation, timing and tactics that are important elements of the campaign to close a successful sale.

The course covers the practical steps that are required to plan, negotiate, and close a successful sale. Valuing the business to be sold and the effective presentation of the commercial attractions of the business are key elements, as are choosing the appropriate advisers and running a competitive auction.

Overview of the Process ■ Motives and objectives of the vendor ■ Which outcome is preferred

• Cash only• “sale with honour”• Management buyout• IPO

■ Timescale

Preparing the Company for sale ■ Optimising the operations

• Removing skeletons, resolving related party conflicts

■ Resolving accounting / audit issues• Tightening up provisions, write offs, stock

obsolescence ■ Clearing legal points

• Employee issues • Customer / supplier disputes

■ Choosing advisers ■ Tax considerations

• The vendor’s position • Company PAYE, corporation tax

Quiz: What are the top ten objective of a vendor

Assessing the value of the business ■ Other factors

• IPR• Market share• Customer base• Niche products• Strategic value to a buyer

Exercise: Calculating the value of a business using different metrics

Initiating the Process ■ Choosing advisers

• Investment bank• Merger brokers• Accountants• Other

■ Agreeing the mandate• Fees

ӹRetainer, success, no go• Exclusions

ӹCompanies and territories• Time limits• Indemnities

■ Preparing key documents • Information memorandum • Support material

ӹConfidentiality undertakings, product

information• Due diligence pack

ӹReasons for, use of vital data rooms ■ Management preparation

• Confidentiality• Conflicts of interest• The “sale team”• Presentation material

The Sale Process ■ The cost / risk / timescale issues in

• A trade sale• Buyout• IPO

■ Trade sale approaches • Public auction• Private auction• Bilateral negotiation

■ Organising an auction • Identifying the purchasers

ӹTiering prospects into probables, possi-bles, maybe

• Defining the deadlines ӹThe importance of realism

• Contact and confidentiality ӹDealing with large company buyers

• Judging the offers ӹWill a “no price” offer work?

• Conducting the second stage discussions ӹCompany and management visits

• Preferred bidder and exclusivity ӹHow long for exclusivity?

CASE STUDY: Reviewing an information memorandum on a company sale to assess: the value of the business, the most likely buyers

■ Sealing the deal• Earn-outs

ӹBridging the valuation gap• Warranties, disclosure letter

ӹBuyer / vendor conflict• Time limits, caps• Completion accounts • Comfort letters

■ Alternative outcomes• IPO, timescale• MBO, management conflicts• Post “exit” lock-in• Ongoing relationship


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Introduction to the Takeover CodeDate: 01 Mar 2018, 12 Oct 2018


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Course Overview

On this introduction to the Takeover Code course, participants will learn about how the Takeover Panel operates in practice and how to apply the six general principles.

The course will cover the issues involved in approaching target companies, making announcements, giving independent advice and complying with share dealing restrictions. Participants will also gain a strong understanding of voluntary, mandatory and partial offers as well as the principles of the bid timetable and the conduct of the parties during an offer period.

The course will examine the circumstances when the Takeover Code is applicable, the relevance of the key rules of the Takeover Code, the application of the Code in practice and the documentation requirements of the Panel.

Introduction to the Takeover Code ■ How the Takeover Panel operates ■ Companies, transactions and persons

subject to the Code ■ Enforcement of the Code

The Six General Principles and their application

Key Code definitions

The approach, announcements and independent advice (Rules 1-3) ■ Secrecy ■ When announcements are required ■ Announcements of possible offers and

naming ■ Terms and pre-conditions in possible

offers ■ Automatic 28 day PUSU ■ Firm offer announcements (Rule 2.7) ■ Consequences of statement of intention

not to make offer ■ Irrevocable commitments ■ Independent advice

Dealing restrictions, disclosures and share purchases ■ Prohibited dealings ( Rule 4) ■ Consideration to be offered (Rules 6 and

11) ■ Consequences of certain dealings (Rule

7) ■ Disclosure requirements in offer period

(Rules 8 and 38) ■ Timing restrictions on acquisition of

shares and exceptions (Rule 5)

Mandatory offers (Rule 9) ■ When required ■ Conditions which are possible ■ Price payable ■ Whitewash procedure ■ Purchase of own shares (Rule 37)

Voluntary offers ■ The acceptance condition (Rule 10) ■ The CMA and the European Commission

(Rule 12) ■ Pre-conditions and conditions in firm offers

(Rule 13) ■ Partial offer requirements (Rule 36)

Provisions applicable to all offers ■ Multiple classes of share capital (Rule 14) ■ Convertibles and warrants (Rule 15) ■ Special deals with favourable conditions

(Rule 16) ■ Announcement of acceptance levels (Rule

17) ■ Restrictions following offers and partial

offers (Rule 35) Conduct during the offer ■ Standards of care for Information (Rule

19) ■ Responsibility for information ■ Unacceptable statements ■ Post-offer undertakings and statements of

intention ■ Equality of information (Rule 20) ■ Restrictions on frustrating action (Rule 21)

Documents ■ Overview of document rules (Rules 23 to

27) ■ Distribution of documents and checklists

(Rule 30)

Profit forecasts, QFBS and asset valuations (Rules 28 and 29) ■ Different types of profit forecast ■ Reporting requirements ■ Disclosures for Quantified Financial Benefit

Statements ■ Consensus forecasts ■ Asset valuation reporting requirements

Outline timetables (Rules 31 to 34 and Appendix 7) ■ Contractual offers ■ Schemes of arrangements


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Joint VenturesDate: 05 Feb 2018, 10 Sep 2018


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Course Overview

Joint ventures are an important option for businesses in their home country or internationally. Along with acquisi-tions it is a model for corporate growth.

The course looks at the reasons for joint ventures including the commercial reasons and how they are reflected in the legal structure and documents.

Looking at negotiations it focuses on the general aspect of negotiations as well as critical areas for joint venture negotiations.

The course recognises the commercial and legal problems that regularly arise during the life cycle of a joint venture. It covers the often thorny issue of pre contract documents including the differences in common and civil law.

It goes on to look at the different options of legal structures that can be selected depending on the commercial ob-jectives and addresses the advantages and disadvantages of each option including limited companies, partnerships and contractual joint ventures.

It then looks at challenges of decision making in a joint venture where parties are working to a common end but have different ultimate interests. This leads to differences, ways to resolve them are looked at and what happens if the joint venture partner are unable to reach a decision. , including deadlock and options such as ‘Russian Roulette’ and Texas Shoot Out’. How and to whom parties may transfer shares, minority shareholders.

Coming to the end of the life cycle the programme focuses on exit, termination and change of control.

During the course participants will look at case studies, look at sample documents and receive checklists to assist them with dealing with joint ventures a following the course.

Introduction ■ What is a Joint Venture? ■ Why enter into a Joint Venture? ■ Reasons for Joint Ventures ■ Choosing a legal structure ■ Key legal considerations ■ Information you need to decide on the legal

structure ■ Key success factors

Negotiating – General Guidelines ■ Objectives in negotiations ■ Strategy ■ BATNA ■ Zone of Possible Agreement ■ Price versus value ■ Creating and sustaining value ■ 10 areas where joint venture negotiations

can establish successful sustainable joint ventures

Pre Contract Documents – Heads of Terms/MoU with Sample Document ■ Pros and cons ■ Types of pre-contract documents ■ Duty of good faith ■ Letters of intent ■ Memorandum of Understanding

■ ‘Subject to contract’ ■ Governing law – choice and impact ■ Advice to negotiators – Checklist

Selecting the Legal Structure that Reflects Commercial Objectives – Key Determinants ■ Relevant laws ■ International joint ventures ■ Questions to address ■ Restrictions

Main Joint Venture Structures – Advantages & Disadvantages ■ Limited Liability Company ■ Limited Liability Partnership ■ Partnership ■ Contractual Joint Venture ■ Contentious areas

Decision Making ■ Directors ■ Votes ■ Quorum ■ Reserved Matters ■ Conflicts of Interest


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Deadlock & Default ■ Default ■ Casting Vote ■ Winding – up ■ Put and Call Options ■ Sale ■ ‘Texas Shoot Out’ ■ ‘Dutch Auction’ ■ ‘Russian Roulette’

Transfer of Shares ■ Pre – emption rights ■ Right of first offer ■ Right of first refusal ■ Pre – emption problem areas ■ Permitted transfers ■ Change of control ■ ‘Drag and Tag’ Rights

Exit, Termination and Change ■ Importance and Key Issues ■ Fixed term/joint renewal ■ Termination for convenience ■ Termination for Cause ■ Consequences of Exit/Termination ■ Winding –up

Case studies

Sample documents and checklists


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Leveraged Loans in Private Equity and Corporate Transactions

Date: 06 Mar 2018, 04 Oct 2018

Location: London Standard Price: £695 +VAT Membership : £556 +VAT

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This programme focuses on club and syndicated leveraged loans provided to both corporate and PE borrowers (i.e. typically this covers loans > 2.0x Debt/EBITDA for most sectors). Loan markets have experienced significant changes over the last few years on a number of fronts; first, larger, syndicated and club deals have seen the importation of terms from the bond markets (e.g. grower baskets and cov-lite, cov-loose packages). Many of these larger deals have also imported N.Y. style language, which is more familiar to U.S. borrowers and lenders. At the same time direct/alternative lending had made significant inroads into the lending market bringing with them a more eclectic approach to lending (e.g. a preference for bullet, as opposed to amortising facilities).

Whilst there are subtle differences between the objectives of corporate and PE borrowers, both share a common objective of seeking to obtain the optimum terms, pricing and flexibility which will allow them to execute their strategic objectives. Clearly the larger deals, where borrowers have the option of accessing the high yield bond market, offer borrowers greater flexibility however smaller facilities have also benefitted from stiff competition from direct lenders (which reaches well below that threshold - in some cases 15 million) which has forced banks and other lenders to offer borrowers better terms and pricing (e.g. grower baskets have been seen in facilities below 30 million).

The topics aim to provide participants with an understanding of the trends and key issues affecting loan facilities in both club deals syndicated deals and also provides borrowers and lenders with a template of how to approach the negotiations. The programme is aimed at borrowers and lenders as well as lawyers, accountants, debt and corporate advisory and other professionals involved in these transactions. Whilst there are subtle differences between objectives of corporate borrowers on the one hand and PE borrowers on the other; there is a high degree of overlap across.

Overview of the market trends affecting corporates and PE borrowers ■ Bifurcation of the leverage loan market ■ Trends larger syndicated deals ■ Trends in club loans ■ Influence of high yield bond market

trends ■ Impact of New York style documentation ■ Corporates vs PE – what’s the difference

Key negotiating strategies – the Borrower’s view ■ Criteria for selecting the most appropriate

lender - Banks vs Direct lenders ■ Key differences in approach between

banks and direct lenders ■ Pros and cons of Banks vs Direct lenders ■ Some banks (and branches) are different ■ Can direct lending applicable for corpo-

rate borrowers? ■ Strategies for negotiating the key com-

mercial terms ■ How to approach the term sheet

• Hard or soft terms?• Focus on everything or only a few “criti-

cal” issues ■ Do debt advisors offer value for money -

Getting the best from your advisors ■ What about the fees ■ A Checklist for borrowers

The Lender’s perspective ■ Beware Commitment letters – reflections

post Novus Aviation ■ The role of the information covenants – do

they really matter ■ If financial covenants don’t matter, what

does? ■ What to focus on in the collateral package ■ Problems with non-guarantor restricted sub-

sidiaries


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Scope of the Loan ■ Concept and composition of the “Cove-

nant (Restricted) Group” ■ Matters affecting Material subsidiaries ■ Matters affecting Immaterial subsidiaries ■ Dormant subsidiaries – why they matter ■ Issues re Joint Ventures & Equity

Changes to the Lenders ■ Transferring a loan – methods, pros and

cons• Novation• Assignment – legal and equitable• Sub-participation

■ Ability to transfer - Consent vs Consulta-tion• Trends in the leveraged market• Why transferability is important for

lenders• Potential problems for borrowers

■ Restrictions on Transferability ■ White / approved lists vs disqualified

lenders

Voting thresholds ■ Key voting thresholds & why they matter ■ Different problems for PE and corporate

lenders ■ Different approaches in syndicated vs

club loans• Majority lenders• Unanimous consent• Super-Majority lenders – “typical”

scope & thresholds ■ Potential pitfalls for lenders ■ Impact of Yank the Bank ■ Role of Snooze & Lose ■ Treatment of Hedge counter-parties

A word about baskets – how and why they matter ■ Role and application of baskets in the

loan market ■ Types of baskets, structure use and ap-

plication• Grower baskets• Builder baskets• Scalable baskets

■ Reclassification and splitting between baskets

“Permitted” definitions – how & why they matter ■ Role and relevance of the “Permitted”

definitions

■ Synchronising the “Permitted” baskets ■ Permitted Acquisitions

• Typical carve-outs- hard vs soft baskets• Additional restrictions

■ Permitted Financial Indebtedness / Security / Guarantees• Scope – Financial Indebtedness defined

(typical exclusions)• Incremental debt- scope and coverage• Accordion facilities

ӹTypical terms & conditions ӹPricing - MFN & sunset periods – what’s market

• General & other debt-related baskets ■ Permitted Payments - typical carve-outs

• What payments are permitted• Basket carve outs – amounts, caps, carry

forward/back• Subordinated debt, equity & equity substi-

tutes• Management/monitoring fees

■ Permitted Disposals• Scope & typical conditions

Debt Service ■ Differences between banks and direct lenders

to amortisation ■ Interest and default interest periods ■ Libor/Euribor floors ■ Original issue discount (OID) – use in the

deal, market trends ■ Margin and margin ratchets ■ Increased costs & gross up clauses

Specific issues for Revolving Credit Facilities (“RCFs”) ■ Clean-downs re RCFs ■ Cashless rollovers – why they matter ■ Problems with Headroom

Mandatory prepayments (Cash sweeps) ■ Excess Cashflow defined ■ Excess Cashflow – typical deductions ■ De minimis basket ■ Cash sweep – step downs (PE vs Corporate) ■ Use and Application of Retained Excess Cash

flow

Mandatory prepayments (Disposal proceeds) ■ What is a “Disposal” ■ Baskets to sale proceeds ■ Annual – individual deal amount ■ Annual basket carve-out ■ Excluded Disposal proceeds / Reinvested

amounts





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Other mandatory prepayments - overview ■ Acquisition Proceeds - overview

• What are “Acquisition Proceeds”• Excluded Acquisition proceeds

■ Insurance Proceeds• Excluded Insurance Proceeds• Basket – annual or per deal• Retention periods

■ Listing Proceeds & change of control

Covenants & Undertakings generally ■ Covenants generally – three categories ■ Information covenants

• Why and how they matters• Issues for lenders issues for borrowers• LMA v Market approach

■ General undertakings• Guarantor coverage – scope and issues

for borrowers• Core carve-outs for sponsors• Carve-outs for corporate borrowers

Financial covenants and Equity cures ■ The main covenants per the LMA & market

• Cash flow cover• Leverage• Interest cover• Capex limits• EBITDA limits (not LMA)• Springing covenants – use, application

and triggers• Other matters – starting headroom

■ Market trends• Number of covenants• Headroom

■ Equity cures• What do they apply to EBITDA, leverage,

cash flow?• Terms - How many, consecutive, over-

cures, application of the funds• Cures in practice

■ Covenant Suspension/ Loosening• Use and application• Typical triggers• Scope of covenants affected

Default and Events of Default ■ Default vs Event of Default ■ What are the key EoDs ■ Grace periods ■ Borrower-friendly exclusions ■ What about cross-default ■ MAC / MAE clause

• Do they still matter posy recent cases?

• Different formulations – LMA vs market (what is reasonable)

■ Problems with “Sanctions” clauses• How to mitigate conflict between U.S.

and EU regulations




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Negotiating Heads of Terms (LOIMOU) & Related IssuesDate: 05 Mar 2018, 12 Oct 2018


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The Heads of Agreement (“Heads”) are perhaps even more important than the SPA since, if they are poorly drafted, they can fail to clarify the essential aspects of the deal adequately they can either delay its completion (or even scupper the transaction) whilst the parties revisit the original terms. Secondly, they can inadvertently create a binding obligation to conclude the deal on unfavourable terms if they omit suitable CPs; for example, not making the deal conditional on adequate due diligence or available financing or being unable to adjust the purchase price later when the assumptions on which the initial price was based, differ post due diligence and finally they could expose the parties to potential liability even if the deal does not proceed (e.g. the duty to negotiate in good faith).

Negotiating some cases, (e.g. dealing with unsophisticated sellers) failure to address contentious issues in the heads can mean the transaction doesn’t complete or takes much longer. The three areas which create the most friction are; First, which Accounts (and accounting policies) have been used by the seller as the basis for valuation (private owners rarely use IFRS/GAAP); secondly, what qualifies as debt (or cash) in the equity bridge and finally, if an earn-out is to be used, what-if scenarios must be considered to avoid disappointment and disputes later.

Whiles the Heads are vital, they often dovetail with other key aspects in the deal particularly the Confidentiality (the “NDA”) and the Exclusivity. Whilst these aspects are often included in separate documents they may also appear in the Heads themselves. They play important role in the deal in differing ways.

The NDA is often the first point of friction between the parties and thus sets the tone for the negotiations that follow. Its rationale is often misunderstood by many practitioners; whilst it is true that confidentiality is critical in deals with proprietorial IP, they offer other benefits to sellers and even the ultimate buyer too. Getting the terms of the Engagement letter right also matters; not only does it set the scope and fees for work but, as numerous clients have found out to their cost, Tailgunner fees can have a nasty sting in the tail (e.g. the Recap and Grandtop cases).

The programme also reviews other critical documents and elements of the M&A process which precede the SPA but which are inextricably linked with the final SPA. For example, Due diligence is inextricably linked with the warranties, disclosure and indemnities but it is vital to strike a balance which enable buyers to make an informed view on the target whilst protecting key commercial information on the target if the deal does not proceed. In this context, the data room (and data room rules) play an important part in this but also giving the seller insight into the buyer’s thinking.

The programme is aimed at those involved in M&A transactions and is designed to focus on the key legal and commercial issues of the deal. It will appeal to lawyers, corporate finance advisors, bankers and principals in the UK and Europe.

Part 1: Heads of Terms (“Heads”)

Tactical matters ■ What’s in a name & does it matter – Heads,

Term sheet, LOI, MOU etc. ■ Rationale & Purpose

• Are they always necessary?• 7 key advantages of using Heads• 4 disadvantages and how to mitigate them

■ Format of Heads • Detailed vs short• Who prepares them

Key legal issues to consider ■ Legally binding or not (q.v. RTS Flexible Sys-

tems case)• Clauses which should not be legally binding• Clauses which should be legally binding• Position in Europe / Civil law• Position in the UK• Impact of “Subject to Contract” (q.v. Global

Asset case) ■ Regulatory matters – Financial Promotion?

(§21, Financial Services and Markets Act 2000)

■ The Duty to negotiate in Good Faith• UK vs Europe/ Civil law• Traps for the unwary

■ Agreements to Agree

Parties, deal structure, price & consideration ■ The Parties (and any guarantors) ■ Description of the proposed transaction

• Deal structure• Full title full title guarantee’ and ‘limited

title guarantee’ ■ Details of the Purchase Price

• Fixed price, a range or to be determined• Basis/Assumptions on which the price is

based (why this matters)• Valuation assumptions

The purchase price mechanism – Locked


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Negotiating Heads of Terms (LOIMOU) & Related IssuesContinued...

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Box v Completion Accounts ■ Three critical issues which need to be ad-

dressed in the Heads (& not left to the SPA)• Which set of “Accounts” are used – why

and how this matters• Earn-outs – defining the benchmark & how

to mitigate problems• Specific issues with the Equity Bridge

■ Nature and timing of the Consideration• When the consideration will be paid• Nature of the consideration e.g. cash

shares loans etc.

The Main Conditions ■ How and why this matters to the buyer ■ Required approvals - clarity is key ■ Due diligence

• Arrangements & requirements• Access to key staff• Data rooms

■ Completing a definitive, legally binding SPA• Who prepares this & why that matters

■ Material Adverse Change• Scope

■ Commercial matters, Legal & Regulatory proceedings• Commercial contracts & licenses / CoC• Completion issues

■ Financing • Terms of financing inter-relation with the

financing documents ■ Pre-completion restructuring ■ Timing - Milestones & long-stop dates

Limiting Liability – Representations, Warranties, Disclosure & Indemnities ■ Liability for pre-contractual statements ■ Dealing with the Warranties

• General or Specific approach to warranties• Scope • Tactical matters for the parties

■ Warranty insurance ■ Due diligence - a risk matrix ■ Interaction with Warranties and Disclosure ■ Key areas of DD

• Lawyers• Accountants / tax• Commercial DD• Insurance• Environmental

Miscellaneous ■ Transaction documents

• Migrating the Heads to the SPA• Interaction with other key documents• Non-compete - Issues re employees and

customers ■ Costs & Break Fees

• Triggers for break fees• Potential problems with Break fees• Legal issues – Is it a penalty?

• Fiduciary duties• Financial assistance

■ Other agreements ■ Rights of third parties ■ Governing law and jurisdiction

Confidentiality letter / NDAs Real purpose of NDAs

• Seller’s perspective • Buyer issues

■ Long vs Short form ■ “Confidential Information” defined

• Form, Source, Method ■ Dealing with Extremely sensitive information ■ “Residual” clause ■ “Authorised Persons” defined

• Seller and buyer issues ■ The 9 Key Undertakings by the Buyer ■ When the deal fails – “Return or Destroy”

• Potential problem areas for the buyer ■ Enforced Disclosure ■ Other ancillary terms

• No offer, representation, warranty or license• Non-solicitation of staff, customers, suppli-

ers• Non-disclosure of discussions• Enforcement and remedies

■ Practical steps for the Seller

Exclusivity ■ Rationale ■ Format – separate document or in the Heads ■ Lock outs vs Lock ins (are latter enforceable)

• Duration - Potential problems “”reasonable period”

■ Pros and cons • Seller’s view• Buyers view

■ Main clauses• Conduct during the Exclusivity Period• Approaches by 3rd parties• Access during the Exclusivity period• Relief and Remedies• Announcements• Termination & Waivers • Costs• Status of the Exclusivity

■ Issues in re fiduciary duties

Appendices (covered time permitting – materials in Appendix)

Engagement letters ■ Defining the deal ■ Role & scope ■ Remuneration & expenses

• Contentious issues - Abort and Tailgunner fees

■ Duration and Termination ■ Liability and Limiting liability ■ Hold Harmless letters


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Negotiation Skills in M&A TransactionsDate: 6 Mar 2018. 20 Sep 2018


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Course Description

This course has been developed to provide M&A bankers with the key soft skills to negotiate and close a sell-side or buy-side transaction in a structured and uniformed approach.

The trainer will discuss the main negotiation techniques, including reciprocity, BATNA and trading concessions. The participants will then role play in separate groups on an M&A case study with participants playing buyers and sellers. During the role play, the key clauses of SPA are discussed including the “lock-box” and “completion accounts” mechanisms, representations & warranties, etc.

Course Methodology

The course will be delivered in a highly interactive, participative way, involving many activities and exercises, thereby ensuring maximum learning and integration of the learning points into the workplace, when the participants return to their daily roles.

Negotiation Personalities ■ Typical negotiation roles include:

• The leader is generally the negotiator with the most experience

• The good guy is the person with whom most of the members of the opposing team will identify

• The bad guy attempts to make the oppo-sition feel that the agreement could stall any minute

• The hard liner takes a tough line on everything

• The sweeper picks up and brings to-gether all the points of view expressed and then puts them forward as a single coherent case

■ Experienced negotiators know how to switch roles depending on the situation

Negotiation Process ■ All negotiations, consciously or uncon-

sciously, go through a number of logical steps

■ Stage 1: preparation and planning• Objective building and fact finding • Collecting the evidence (organising the

facts)• Stakeholder analysis (identifying the key

decision makers) • Position perception

■ Stage 2: enquire and test assumptions• Build rapport & create a positive environ-

ment• Avoid hostility under all circumstances

■ Stage 3:propose

• Let the other party make the first propos-al

• Deliver your proposal with little emotion • Never offer your final position at the start • Aim high whilst being reasonable

■ Stage 4: bargain• Trade concessions rather than just make

concessions • Avoid “irritators” and overly frequent

counter-proposals ■ Stage 5: close

• Avoid defend-attack spirals • Provide a “feelings commentary” • Avoid “argument dilution”

M&A Negotiation ■ The ten fundamentals principles to negotia-

tion techniques• Set maximum and minimum objectives • Keep analysing the deal variables • Always aim high• Never give a concession – always trade it• Keep the whole relationship in mind• Know when to walk away from a deal• Know the negotiation process• Have a BATNA (Best Alternative To a Ne-

gotiated Agreement)• Select an effective negotiation strategy• Change your strategy if necessary but

never change your BATNA ■ The six rules of influence: reciprocation,

scarcity, authority, commitment, liking and consensus

■ BATNA• Before the negotiation, decide what you

will do if nothing comes of the negotiation• Unless you have a plan B, your anxiety

may reach dangerous levels


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Negotiation Skills in M&A TransactionsContinued...

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• BATNAs set the threshold in terms of the full set of interests that any acceptable agreement must exceed

• Both parties doing better than their BATNAs is a necessary condition for an agreement

■ Zero sum fallacy• Zero-sum fallacy is a situation in which

a participant’s gain (or loss) is exactly balanced by the losses (or gains) of the utility of the other participant(s)

Final Case Study - Introduction

■ The participants are split into two groups, a buyer (a multinational company) and a seller (a private equity firm)

■ The key focus will be on negotiating and executing deals smoothly and correctly to the best interest of the parties while ar-riving at an acceptable solution for both parties

■ The participants will role-play the M&A ne-gotiation in two rounds

Final Case Study – Round I

■ The seller has been running a competi-tive process and has received non-bind-ing offers from several parties

■ One of the buyers is trying to obtain an exclusivity and has asked for a meeting with the seller to discuss their bid and the key clauses of the SPA.

■ Final Case Study – Round II

■ The interested buyer has been granted exclusivity and is negotiating the detailed clauses of the SPA including:• The price adjustment mechanism:

locked box vs. completion account• An earn-out or deferrred payment

structures• The potential adjustments to working

capital and capex • The representation & warranties and

related indemnities• A pro or anti-sanbagging provision• A MAC clause


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Tax Issues in M&ADate: 23 May 2018, 02 Oct 2018


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This seminar considers the taxation implications of buying and selling businesses.

The viewpoints of the purchasers and vendors are both considered in depth, with the relevant taxes being covered with worked examples and a case study.

The seminar also covers the tax treatment of managers’ shares and tax issues relating to venture capital.

Advising the Purchasers

■ Purchase of shares or trade and assets? ■ Tax relief for goodwill and intangibles ■ Capital allowances considerations, particu-

larly fixtures in buildings ■ Taking advantage of trading losses in target,

including the new rules from 1 April 2017 ■ Financing the transaction – tax relief for

interest costs ■ Stamp Duty and Stamp Duty Land Tax con-

siderations

Advising Individual Vendors

■ Pre-sale planning ■ Sale of shares or sale of assets? ■ Maximising CGT entrepreneurs’ relief ■ The importance of “trading company” status ■ Tax treatment of consideration – cash,

shares, loan notes and earn-outs ■ QCBs or Non-QCB loan notes? ■ Tax implications of liquidation following the

sale of the trade

Advising Corporate Vendors

■ Pre-sale planning ■ Form of consideration – cash, shares, loan

notes and earn-outs ■ The substantial shareholdings exemption

and the new rules from 1 April 2017

HMRC Clearances, in particular

■ Section 138 TCGA 1992 re capital gains ■ Section 701 ITA 2007 – cancellation of tax

advantages

Tax Issues affecting employee shares

■ Taxation of employee shares including re-stricted securities

■ Impact on “earn outs” and MBOs ■ The use of share options to attract and retain

key staff ■ Availability of CGT entrepreneurs’ relief for

the management team

Tax Issues relating to Venture Capital

■ An overview of the Enterprise Investment Scheme (EIS) and Seed EIS

■ Qualifying companies and excluded activities ■ Conditions for the individual investor ■ Significance of being “connected” with the

company ■ The “Business Angel” rule ■ Venture Capital Trusts


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Mergers & Acquisitions (M&A) CourseDate: 22-25 Jan 2018, 15-18 May 2018, 22-25 Oct 2018


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This four day M&A course covers all aspects of buying, selling, valuing private companies and management buy-outs.

The first day of this mergers & acquisitions course covers creating shareholder value through the pursuit of a successful M + A strategy has been shown to be a far from risk-free activity. Buyers overpaying or using inappropriate financing methods can lead to destruction of value and in some cases financial distress.

The second day of this mergers & acquisitions course covers the topics of the financial ratios used in comparable company valuation, creative accounting, the cost of capital, forecasting and discounting free cash flow. Exercises include the use of an Excel spreadsheet as input to valuing a business and, accordingly, attendees are requested to bring a laptop to the course.

The third day of this mergers & acquisitions course covers the practical steps that are required to plan, negotiate, and close a successful sale. Valuing the business to be sold and the effective presentation of the commercial attractions of the business are key elements, as are choosing the appropriate advisers and running a competitive auction.

The fourth day of this mergers & acquisitions course covers the principles and practicalities involved in arranging and negotiating a management buyout. In addition to the legal issues to be addressed, the use of bank debt and other financial instruments is examined in the context of developing a workable structure for the deal.

Day 1: The Drivers of Growth

The Drivers of Growth ■ Shareholder value ■ The company life cycle

• The importance of directors recognising the value curve

■ Risk and return• Relating risk to the life cycle phase of the

company / target ■ Product market growth and decline

• Evaluating niches, substitutes, value in innovation

REVIEW: Comparison and contrast of the lifecycle of three different companies, highlighting how success or failure with acquisitions has determined their fate

• ICI• Debenhams• GKN

Growth through Acquisition ■ Assessing the alternatives

• Investment• JV• Acquisition

DISCUSION: Advantages and disadvantages of each

approach ■ Determining the acquisition

• Market objectives ӹConsolidating a fragmented market ӹBuilding the value proposition

• Management issues ӹAssessing cultural fit

• Price parameters ӹKnowledge of comparative deals

• Opportunity cost ӹ Is it a “now or never” deal

REVIEW: The Ansoff Matrix, a handy way to categorise potential risks in acquisition strategies

■ Pitfalls to avoid • Realism of synergies

ӹRisks of prediction, cost and achievement• Accounting standards

ӹWho is the auditor, what principles are followed

• Judging forecasts ■ Scepticism rules

Commercial factors • Target’s history• Recurring revenue• Intellectual property


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Mergers & Acquisitions (M&A) CourseContinued

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• Customer list

CASE STUDY: Reviewing company information to arrive at a value, taking into account qualitative and strategic factors

The Acquisition Process ■ Establishing acquisition criteria

• Target size and affordability • Potential synergies• Market / competitor impact• Regulatory factors• Shareholder impact

■ Due Diligence • Investigation prior to offer

ӹPublic sources ӹPrivate sources

■ Verification• Contracts• Accounts• Pensions• Employee disputes• Litigation

CASE STUDY: Reviewing summary information on a company to determine which areas need investigation and who should have responsibility for the task

Structuring the deal ■ Earn-out / deferred consideration ■ Non-compete undertakings ■ Warranties and indemnities ■ Disclosure letters

Acquisition Integration ■ Success / failure factors ■ The importance of the integration team ■ Earn outs and accounting issues ■ Incentivising key managers ■ Establishing clear reporting lines

tax considerations

Day 2:Overview of the Process ■ Motives and objectives of the vendor ■ Which outcome is preferred

• Cash only• “sale with honour”• Management buyout• IPO

■ Timescale

Preparing the Company for sale ■ optimising the operations

• removing skeletons, resolving related par-ty conflicts

■ resolving accounting / audit issues• tightening up provisions, write offs, stock

obsolescence ■ clearing legal points

• employee issues • customer / supplier disputes

■ choosing advisers ■ tax considerations

• the vendor’s position • company PAYE, corporation tax

Quiz: What are the top ten objective of a vendor Assessing the value of the business ■ Other factors

• IPR• Market share• Customer base• Niche products• Strategic value to a buyer

Exercise: Calculating the value of a business using different metrics

Initiating the Process ■ Choosing advisers

• Investment bank• Merger brokers• Accountants• Other

■ Agreeing the mandate• Fees

ӹRetainer, success, no go• Exclusions

ӹCompanies and territories• Time limits• Indemnities

■ Preparing key documents • Information memorandum • Support material

ӹConfidentiality undertakings, product information

• Due diligence pack ӹReasons for, use of vital data rooms

Management preparation • Confidentiality• Conflicts of interest• The “sale team”• Presentation material

The Sale Process ■ The cost / risk / timescale issues in

• A trade sale




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• Buyout• IPO

■ Trade sale approaches • Public auction• Private auction• Bilateral negotiation

■ Organising an auction • Identifying the purchasers

ӹTiering prospects into probables, possi-bles, maybe

• Defining the deadlines ӹThe importance of realism

• Contact and confidentiality ӹDealing with large company buyers

• Judging the offers ӹWill a “no price” offer work?

• Conducting the second stage discussions ӹCompany and management visits

• Preferred bidder and exclusivity ӹHow long for exclusivity?

CASE STUDY: Reviewing an information memorandum on a company sale to assess: the value of the business, the most likely buyers

■ Sealing the deal• Earn-outs

ӹBridging the valuation gap• Warranties, disclosure letter

ӹBuyer / vendor conflict• Time limits, caps• Completion accounts • Comfort letters

■ Alternative outcomes• IPO, timescale• MBO, management conflicts• Post “exit” lock-in• Ongoing relationship

Day 3: Valuation Principles ■ Value to whom? ■ Price and intrinsic value ■ The risk / return trade off ■ Strategic risk

The Accounting Approach ■ Accounting measures of performance and

value ■ Problems of the accounting approach ■ Are profits relevant? ■ GAAP vs IFRS ■ Creative accounting

• How to find it • Recent examples

Review: Was the near collapse of Quindell inevitable?

Accounting Valuation Metrics ■ Asset and net asset valuations ■ Dividend-based models

• Dividend yield• Dividend discounting

■ Application and drawbacks of dividend mod-els

■ Earnings-based • Price / earnings ratios • P/E strengths and weaknesses • PEG ratios • Enterprise value

Exercise: Valuation of a business using different metrics

Comparable Company Valuation Issues ■ Is the comparability achievable?

• Accounting principles • Averages, medians, outlines • Listed vs private

■ Sustainability of earnings ■ Business model flexibility

Exercise: Project Oxford, using comparable company techniques to value a company for acquisition

Calculating the Cost of Capital ■ Assessing the cost of debt ■ Calculating the cost of equity

• The risk free rate• Equity premium • Beta

■ The weighted average cost of capital • The flaws in the capital asset pricing model • Alternative approaches

Exercise: Calculating the cost of equity and the weighted average cost of capital

The Cash Flow Approach to Valuation ■ The time value of money ■ Calculating the discount rate ■ Forecasting free cash flow

• Calculating FCF• Identifying value drivers

■ Terminal value

Exercise: Discounting free cash flow to arrive at a value per share Exercise: Project Media. Using an Excel spreadsheet and given assumptions to arrive at a value of a company that is an




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acquisition target.

Project Media II. Varying inputs, in particular the debt / equity mix of the acquisition financing, to consider the maximum price that could be paid for the target

Day 4: The Growth of Private Equity and Leveraged Buyouts ■ Academic rationale for the use of leverage

• Modigliani/Miller theory • Michael Milken’s research• Growth of shareholder activism

ӹReviving under performers• Changes in company law• The development of the European high

yield bond and securitisation markets

The Principles of Leveraged Finance ■ The use of debt to drive equity values

• Cash flow management ӹReducing debt to drive equity value

• Operational improvements ӹBuilding “need to have”

• Incentivisation of management ӹGetting rich together

• Cash-capture clauses

Exercise: Good or Bad LBO?

Discussion of recent transactions to see which ones the attendees would do, and what lessons can be learned about elements of success or failure

Structuring the transaction • Target IRR

ӹAssessing the return appropriate to the risk

• Assessing debt capacity ӹForecasting future cash generation

• Senior / mezzanine debt mix ӹ Judging asset values

• Forecasting exit values ■ Consideration of non-bank finance

• High-yield bonds ӹTerms and size of issue

• Second lien debt > Too much debt?

• PIK finance ӹSaint or sinner?

• Vendor loan notes ӹMaking the deal look good

Case Study: Based on information provided attendees are tasked with structuring the finance for an MBO. Answers are discussed to identify the critical elements in the financing

■ Legal elements• Warranties and indemnities

ӹ Investor protection• New Memo & Arts

ӹ Incorporating P.E. control elements • Tag along and drag along

ӹControl of the exit • Veto rights for private equity

ӹControl of management ■ Management

• Jensen and Meckling agency theory ӹWhy buyouts work

• The envy ratio ӹManagement incentivisation

• Agreeing the ratchet ӹCarrot and stick

• Good leaver / bad leaver provisions ӹCovering under performance

Exercise: Agreeing the terms of the envy ratio

Identifying and Closing a Good Transaction ■ Ideal company characteristics

• The three golden rules ■ MBO / MBI

• Assessing management strength ■ Meeting vendors’ expectations

• Structuring the deal ■ Avoiding conflicts of interest

• Recognising the risks of multi-layered financing

■ Due diligence• Investigation and verification

■ Tie-in with contract terms ■ Structuring the debt appropriate to the busi-

ness

Discussion: How to finance the acquisition of Manchester United. The Man U accounts are reviewed with the object of deciding how to finance its acquisition. Answers are compared to the actual result.

Exit ■ Control by P.E. house ■ IPO ■ Second round financing ■ Trade sale ■ The “living dead”




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The Modelling For Mergers & AcquisitionsA Practical 3-Day Workshop

Date: 05-07 Feb 2018, 25-27 Jun 2018, 12-14 Nov 2018Location: London Standard Price: £1,800 +VAT

Membership: £1,440 + VAT BOOK NOW

Course Overview

This course covers the key elements of an acquisition or merger, from the initial stand-alone valuation of the target to the more complex accounting and modelling issues to be considered and finally analysing and assessing the value created by synergy benefits and leverage.

This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in transaction analysis.

As part of their work on this course participants model transactions based on real-life companies and scenarios.

By the end of this course participants will understand: ■ Drivers on M&A ■ How to model integrated financial statements ■ How to use financial statements to value a business ■ How to model the balance sheet impact of transactions ■ How to incorporate synergies into modelling work ■ How to differentiate between financing and operating synergies ■ How acquisitions can be structured

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse leveraged acquisitions: ■ Building up from partially-complete models ■ Working with integrated financial statements ■ Developing the acquisition structure and modelling instruments ■ Running scenarios, iterating and optimising

Each participant should bring a laptop with USB port to the course to facilitate modelling work.

Day 1

M&A model build up: the starting point

■ Modelling integrated financial statements ■ Model structure ■ Key forecast ratios ■ Sourcing and cleaning historic data ■ What makes a good model?

Modelling – integrating financial statements: participants complete a partially-developed financial model for a public quoted company which integrates P&L, balance sheet and cash flow. This company will be the target company used in the merger analysis

Modelling stand-alone valuation ■ Overview of valuation methodologies ■ What do investment banks do? ■ What methodologies could we use? ■ How should we define firm value? Equity v.s. en-

terprise value ■ Calculating free cash flow before financing ■ Understanding and calculating WACC ■ Discussion – calculating WACC ■ Key issues with a two stage DCF valuation – WACC

and terminal value assumptions Modelling - valuation: participants calculate the cost of capital and complete a DCF valuation for the target company, producing a stand-alone valuation as a cross check to the acquisition price Day 2


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Accounting for corporate transactions ■ Different types of transaction and how they

are modeled in practice ■ Consolidation accounting under the current

IFRS 3 an IAS 27 ■ Change of control triggers ■ Accounting for non-controlling interests

(“NCI”) ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting

under IFRS ■ Definition of control ■ Calculation of goodwill

Modelling: delegates complete a variety of transaction models incorporating all types of corporate transaction and calculate the effect of a transaction on a set of consolidated accounts in preparation to perform a merger analysis with the target business and an acquirer

Acquisition finance ■ Types of transactions and synergies ■ Availability of synergies and problems in

achieving them ■ Methods available for valuing synergies ■ Key differences between public vs. private

deals, recommended vs. hostile bids ■ Choices for growth: acquisition vs. organic

vs. joint venture ■ Defence strategies for target companies

resisting a hostile bid Case study: Participants calculate synergies for a case company

Day 3Structuring acquisition finance ■ Once price has been agreed, how is it

paid? Cash vs. Shares ■ Financing choices for raising cash for an

acquisition: Debt vs. Equity ■ Calculating the success of a deal, accretion

vs value creation ■ The nature of equity instruments ■ The different risks and rewards accruing to

different parties ■ The impact of loan stock, convertibles and

preference shares on WACC ■ Calculating returns to key participants

Case study: Calculating accretion/dilution and the effect of hybrids on cost of capita

Merger modelling case study ■ Completing a merger model

■ Getting to DCF valuation for the combined busi-ness

■ Combined WACC ■ Valuing operating synergies ■ Valuing financing synergies ■ Accretion/dilution analysis vs wealth creation ■ Sense-checking the output and adjusting the

capital structure

Modelling – bringing it all together: participants complete a complex merger model for an acquisition of the target business incorporating synergy analysis and varying capital structure. The transaction is analysed on an accretion/dilution analysis and a wealth creation/return on capital analysis

At the end of this session participants will have a working acquisition model incorporating a variety of different forms of transaction analysis

Course conclusion: best practice in transaction analysis ■ Participants will have improved their understand-

ing of and have had experience of modelling mergers and acquisitions from first principles

■ Simple and clear reference Excel models - provid-ing participants with a platform for future internal modelling efforts and aiding decision making

■ Participants who, at the end of the course, under-stand the drivers on transactions and how trans-actions can be modified to suit the various parties

What our clients are saying about the course

“Methodical and clear. Liked how it went through whole process of linking up

financial statements”


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Private Equity & Management Buy-OutsDate: 18 May 2018, 25 Oct 2018

Location: London Standard Price: £625 + VATMembership: £500 +VAT

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Course Overview

The sale of companies to management teams backed by Private Equity investors, using a leveraged financing of the acquisition, has become an increasingly common feature of the corporate scene. Whilst appearing simple to arrange, there are complex elements to a successful transaction.

This course covers the principles and practicalities involved in arranging and negotiating a management buyout. In addition to the legal issues to be addressed, the use of bank debt and other financial instruments is examined in the context of developing a workable structure for the deal.

The Growth of Private Equity and Leveraged Buyouts ■ Academic rationale for the use of lever-

age• Modigliani/Miller theory • Michael Milken’s research• Growth of shareholder activism

ӹReviving under performers• Changes in company law• The development of the European

high yield bond and securitisation markets

The Principles of Leveraged Finance ■ The use of debt to drive equity values

• Cash flow management ӹReducing debt to drive equity value

• Operational improvements ӹBuilding “need to have”

• Incentivisation of management ӹGetting rich together

• Cash-capture clausesExercise: Good or Bad LBO?Discussion of recent transactions to see which ones the attendees would do, and what lessons can be learned about elements of success or failure ■ Structuring the transaction

• Target IRR ӹAssessing the return appropriate to the risk

• Assessing debt capacity ӹForecasting future cash generation

• Senior / mezzanine debt mix ӹJudging asset values

• Forecasting exit values ■ Consideration of non-bank finance

• High-yield bonds ӹTerms and size of issue

• Second lien debt ӹToo much debt?

• PIK finance ӹSaint or sinner?

• Vendor loan notes ӹMaking the deal look good

Case Study: Based on information provided attendees are tasked with structuring the finance for an MBO.

Answers are discussed to identify the critical elements in the financing ■ Legal elements

• Warranties and indemnities ӹ Investor protection

• New Memo & Arts ӹ Incorporating P.E. control elements

• Tag along and drag along ӹControl of the exit

• Veto rights for private equity ӹControl of management

■ Management • Jensen and Meckling agency theory

ӹWhy buyouts work• The envy ratio

ӹManagement incentivisation• Agreeing the ratchet

ӹCarrot and stick• Good leaver / bad leaver provisions

ӹCovering under performanceExercise: Agreeing the terms of the envy ratioIdentifying and Closing a Good Transaction ■ Ideal company characteristics

• The three golden rules ■ MBO / MBI

• Assessing management strength ■ Meeting vendors’ expectations

• Structuring the deal ■ Avoiding conflicts of interest

• Recognising the risks of multi-layered financing

■ Due diligence• Investigation and verification

■ Tie-in with contract terms ■ Structuring the debt appropriate to the

business Discussion: How to finance the acquisition of Manchester United. The Man U accounts are reviewed with the object of deciding how to finance its acquisition. Answers are compared to the actual result. Exit ■ Control by P.E. house ■ IPO ■ Second round financing ■ Trade sale ■ The “living dead


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Sale & Purchase Agreements - The Commercial IssuesDate: 19 Feb 2018, 09 Jul 2018, 26 Nov 2018

Location: London Standard Price: £725+VATMembership Price: £580 + VAT

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Course Overview

A simplistic view of an acquisition is that the actual price paid is paramount but experienced practitioners recognise that price is but one aspect of the deal and that there is the potential for significant value leakage in arriving at the actual price and also from claims arising after completion.

The “price” paid may seem a simple concept but, in practice, requires an understanding of how this is derived. Most private acquisitions are based on a “cash-free, debt-free basis” with adjustments for working capital or net assets. Buyers typically develop an enterprise value which is then adjusted to derive an equity value by adjusting for cash, debt and working capital all of which needs to be captured in the Sale & Purchase Agreement (“SPA”). When the consideration is to be paid in a foreign currency, a range of issues can intervene to create problems for both parties.

English law is widely used for many contracts and the recent decision in Arnold v Britton has clarified decisions in earlier judgements and clarified the how the courts and parties will approach this in the future. The course reviews these and the differing approach to this in the USA.

Negotiating and documenting these items is not as straightforward as one might expect; for example, does “cash” include “trapped cash”, what does debt include, what is wrong with using “average” working capital and how can parties minimise subsequent disputes? Additionally, the choice of the completion mechanism (completion accounts or locked box) creates further opportunity for further value transfer. Even after completion the seller may find further value erosion through claims arising under the warranties and indemnities.

There is no right or wrong answer to many of these questions and the ultimate position will be dictated by the negotiating strength of the respective buyer and seller. Despite that, a sound grasp of the key commercial and legal issues can minimise value loss for parties.

This programme focuses on transactions involving the purchase of shares but also covers areas of specific relevance to asset purchases. It provides a step by step template to the basics but also covers the critical legal and commercial aspects in the transaction from the perspective of both buyer and seller. Reference is made to recent or relevant leading cases.

Please note that this course covers material that is also covered on the Advanced Negotiation Issues in M&A course.

SPA structure & Interpretation issues ■ The skeleton structure of a contract: over-

view ■ General approach to interpretation of con-

tracts• UK vs USA vs Europe• Influence of Arnold v Britton case

■ Interpretation – Forex issues re price / cur-rency (avoiding the traps)

■ Implied terms & “duty to negotiate in good faith”• Position in the UK • Position in the USA• Position in Europe / civil law - Traps for

the unwary ■ The spectrum of “endeavours/ efforts” –Best

vs Reasonable other variants ■ Force majeure –

• Doctrine of Frustration • Problems in English law

■ Dispute Resolution ■ Jurisdiction & choice of law

Ancillary agreements ■ Confidentiality letters ■ Exclusivity agreements ■ Heads of agreement / letter of Intent

• Checklist of key issues• Drafting guidelines• Migrating the terms to the SPA• Pros & cons

■ Side letters• What’s in a name

The purchase price: reconciling enterprise to equity value ■ Common purchase price protections

• Cash free/ debt free (What should be in-cluded in Debt)

• Cash vs trapped cash?


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• Equity / NAV adjustments• Capex issues• Debt – what is included?

■ Adjustments for working capital• Receivables• Inventory• WIP – problem areas• Normalised working capital

Other adjustments to the price – warranties & indemnity claims Completion mechanisms & non-simultaneous exchange & completion ■ How this can affect the deal, source of val-

ue loss ■ Locked box vs completion accounts

• Key differences ■ Completion accounts

• Pros & cons• Problem areas – access post completion

■ Locked box• Pros & cons• Leakage vs permitted leakage• Other areas of potential dispute

■ Issues with the “accounts” • Impact & role in the deal – why they

matter• Which accounts? Consolidated vs individ-

ual, statutory, audited, management ■ Issues to consider when exchange & com-

pletion not simultaneous • Conditions to completion• Matters between exchange & completion• Other matters – warranties, costs,

breach by sellerRepresentations & misrepresentations ■ Representations vs warranties vs indemni-

ties• Representations vs “term” (of contract)

■ Critical negotiating issues (buyer vs seller friendly)• Financial statements “fair presentation”

representation• “No undisclosed liabilities” representation• “Full disclosure” representation

■ Manner of misrepresentations• Statements of opinion vs statements of

law ■ Types of misrepresentations & their reme-

dies• Fraudulent vs negligent vs innocent mis-

representations ■ Accuracy of representations

• When must representation to be accu-rate – agreement vs closing date

• Accuracy of representations - in all vs material respects vs MAE qualification

Warranties ■ Warranties – rationale ■ Warranties and interaction with disclosure ■ Purpose of warranties

• Retrospective price adjustment ■ The common areas of warranty protection

■ The information warranty (on the target)• Quality of information – information is

“true, accurate, complete and not mislead-ing”

• Accuracy of information in the disclosure letter / bundle

• The “full disclosure / sweeper” warranty ■ Who provides the warranties

• Issues with multiple sellers, limits on liabil-ity

• Sales of subsidiaries• Sales by trustees• What about the directors?• Private equity issues - managers (not own-

ers)

Disclosure ■ Why & how it matters ■ General vs specific disclosure ■ The disclosure letter & disclosure bundle ■ When should disclosure be made? ■ Seller’s vs buyer’s approach to disclosure ■ What is disclosed – the data room? ■ How full & complete must disclosure be ■ What is fair disclosure?

Indemnities ■ Purpose of & rationale for Indemnities ■ Key issues

• Sandbagging (buyer’s ability to seek re-dress despite prior knowledge)

• Indemnification as the exclusive remedy (carve-outs)

■ Main areas of Indemnity coverage• Environmental• Product liability• Litigation (esp IPR)

Limitations on liability under the warranties & indemnities ■ Awareness carve-outs ■ Time limits ■ Financial limits

• De minimis limits• Threshold for aggregate claims• Overall cap

■ Other limits ■ Security for breach of warranty

• Retentions & escrow accounts• Set-off• Bank guarantees

■ Warranty & Indemnity insurance – a viable solution?• Buyer vs seller policies – key differences

Tax; what‘s best covenant, warranty, indemnity? ■ Why is a tax covenant needed - rationale

• Benefits vis-à-vis the tax warranties• Scope of the covenant• Why & when is a tax warranty also re-

quired?• Impact of the Zim Properties case

Specific matters re U.S. deals ■ Jurisdiction does matter (U.S. is a Federal

System)


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Valuing A BusinessDate: 17 May 2018, 24 Oct 2018

Location: London Standard Price: £625+VATMembership Price: £500 +VAT

Course Overview

Valuation of a business, whether in the context of investment or M&A, is central to the negotiation of a transaction. Methods of valuation vary and a fundamental difference exists between the accounting and cash-based approaches.

The course covers the topics of the financial ratios used in comparable company valuation, creative accounting, the cost of capital, forecasting and discounting free cash flow. Exercises include the use of an Excel spreadsheet as input to valuing a business and, accordingly, attendees are requested to bring a laptop to the course.

Valuation Principles ■ Value to whom? ■ Price and intrinsic value ■ The risk / return trade off ■ Strategic risk

The Accounting Approach ■ Accounting measures of performance and

value ■ Problems of the accounting approach ■ Are profits relevant? ■ GAAP vs IFRS ■ Creative accounting ■ How to find it ■ Recent examples

Review: Was the near collapse of Quindell inevitable?

Accounting Valuation Metrics ■ Asset and net asset valuations ■ Dividend-based models ■ Dividend yield ■ Dividend discounting ■ Application and drawbacks of dividend

models ■ Earnings-based ■ Price / earnings ratios ■ P/E strengths and weaknesses ■ PEG ratios ■ Enterprise value

Exercise: Valuation of a business using different metrics Comparable Company Valuation Issues ■ Is the comparability achievable? ■ Accounting principles ■ Averages, medians, outlines ■ Listed vs private ■ Sustainability of earnings ■ Business model flexibility

Exercise: Project Oxford, using comparable company techniques to value a company for acquisition

Calculating the Cost of Capital ■ Assessing the cost of debt ■ Calculating the cost of equity ■ The risk free rate ■ Equity premium ■ Beta ■ The weighted average cost of capital ■ The flaws in the capital asset pricing model ■ Alternative approaches

Exercise: Calculating the cost of equity and the weighted average cost of capital

The Cash Flow Approach to Valuation ■ The time value of money ■ Calculating the discount rate ■ Forecasting free cash flow ■ Calculating FCF ■ Identifying value drivers ■ Terminal value

Exercise: Discounting free cash flow to arrive at a value per share

Exercise: Project Media. Using an Excel spreadsheet and given assumptions to arrive at a value of a company that is an acquisition target

Project Media II. Varying inputs, in particular the debt / equity mix of the acquisition financing, to consider the maximum price that could be paid for the target

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Valuing Start Up And Pre IPO CompaniesDate: 22-23 Mar 2018, 7-8 Nov 2018

Location: London Standard Price: £1,350+ VAT Membership Price: £1,080 +VAT

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Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value companies which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the development stage at which the company operates.

The course covers companies at the early growth and start up stage, such as technology, biotechnology and any early funding stage business. The key challenges associated with such companies are discussed and the best valuation approach considered.

The course also covers pre IPO companies at the rapidly growing phase of development which, depending on the geographic location, may cover a wide variety of sectors. As well as discussing some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches such as decisions trees, simulations, scenario analysis and real option valuation. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken. Examples are provided to illustrate each issue. Participants will be required to bring a laptop to the course.

Overview of valuation approaches ■ Intrinsic valuation – traditional cash flow

techniques ■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value

created through optionality Other valuation issues ■ Assessing risk – the risky risk free rate and

other current valuation issues ■ The economic cycle – incorporating mac-

ro-economic factors into a valuation

Valuing early stage and start-up companies and sectors ■ A life cycle view of start-up companies

• Start-up companies in context ■ Characteristics of young companies and

sectors• The key challenges with start-up compa-

nies• Visibility – a key valuation challenge

■ Valuation issues – intrinsic value• How to value existing assets in a start-up• Cash burn and the effect on existing as-

sets• The future of the business – high growth

& growth phases• Assessing growth rates - the key compo-

nent of value• Adjusting risk for small fast growing busi-

nesses• Discount rates for pure equity financed

businesses• When to calculate terminal value• Reducing the dependence on terminal

value• Value of equity claims

ӹAssessing equity claims in a early stage business

■ Valuation issues – relative valuation• Problems with start-up multiple analysis• Determining the starting point – revenue

multiples vs profitability multiples• Which year? – Determining stability for

multiple calculation and techniques for “normalising” multiples vs the sector

Valuing a start-up or early stage business in practice ■ Main errors made in valuing early stage busi-

nesses • Macro vs micro analysis• Product success and market share• Bottom up approach to a valuation

ӹCapacity capability• Estimating and using different discount

rates ӹThe use of phased discount rates


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ӹDiscount rates as maturity approaches • Ensuring consistency in a valuation• Private and public multiples• Option to expand valuation

ӹHow optionality affects valuation

Valuing pre IPO companies ■ A life cycle view of pre IPO rapid growth

companies• The rapid growth company in context

■ Characteristics of growth companies and sectors• How are growth companies different?

■ Valuation issues – intrinsic value• How historic numbers are misleading• How asset life may develop in the high

growth phase• How existing assets differ in a rapid

growth business• Where the bulk of value is created by

a rapid growth company – the growth phase

• Capital intensity and the rapid growth business

• The development of risk during the growth phase

• The stage at which a terminal value should be calculated for a rapid growth business – the path to IPO

■ Value of equity claims• The differing equity claims in a rapid

growth business• Participation by different equity holders

■ Valuation issues – relative valuationPeer groups – private vs public companies• Finding similar growth businesses – differ-

ent sectors?• Risk measures – adapting a multiple analy-

sis for risk ■ Valuing a growth business in practice

• Main errors made in valuing growth busi-nesses

• Dealing with immature markets• Assessing product cycles• Ability to execute – the key driver

■ Valuing the operating assets through the growth phase• How operating asset lives develop in the

high growth phase• Ensuring consistency in a valuation• Reinvestment and growth• Assessing investment requirements – the

returns and reinvestment equation• Completing the valuation – combining re-

turns and risk in a model

Valuing Start Up And Pre IPO Companies


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Valuing a Pharmaceutical CompanyDate: 27 Feb 2018, 13 Nov 2018

Location: London Standard Price: £695 +VAT Membership Price: £556 + VAT

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Course Overview

If the business model of the modern pharmaceutical industry did not already exist, management consultants and business schools would surely have invented it as a fictional basis for exploring the challenges posed by a perfect storm of every conceivable risk and uncertainty.

It is perhaps doubtful whether investors, managers and analysts would have believed that any business model embodying such a perfect storm would be sustainable and therefore worth studying at all – were it not for the fact that in the pharmaceutical industry, real life really is stranger than fiction.

Nowhere are all the risks and uncertainties confronting the pharmaceutical industry more clearly or comprehensively exposed to view than in the process of valuation.

This one-day intensive workshop begins with an in-depth analysis of the pharma business model itself, and then explores in detail the theoretical and practical barriers to the application of the most widely employed valuation metrics and methods.

It locates common pitfalls, and shows how a judicious selection of ‘horses for courses’ can help us to establish at least a conditional range for possible valuations in different contexts.

The course is ‘intensive’ rather than ‘advanced’, in the sense that it is strongly interactive in tone and structure (Excel-based exercises figure prominently, especially in the second half), yet it assumes no more than a basic understanding of financial statements and of a few of the most widely used measures of financial performance and condition, such as return on capital and p/e ratio.

As the participants are being asked to ‘unlearn’ much of their previously unchallenged conventional wisdom, those who come to the table with less ‘inherited baggage’ might even have an advantage!

Review of the pharma business model, with copious illustrations ■ Long, unpredictable and variable life-cycles of

individual products, from discovery, through pre-clinical and clinical development, to launch and eventual patent expiry

■ Low correlation in timing and amount of costs and revenues

■ Imperfect diversification of product portfolios (in terms of product numbers, sizes, types, and stag-es in life-cycle)

■ Exposure to a wide range of long-term uncon-trollable factors – demographic, epidemiological, scientific (‘looking for needles in haystacks’), political, geopolitical and economic

■ Uncomfortably close and unusually complex relationship with government (healthcare policy and priorities, regulation, pricing regime, overall demand)

■ High risk of unforeseen technical failure, and costly and protracted lawsuits

■ Little freedom to plan for long term, in face of constant threat from opportunistic predators

Overview of conventional models: their general strengths and weaknesses, when they work best – and when they work least well ■ Primary models

• NPV based on Free Cash Flow (FCF)• Comparables and benchmarking• Book-based models• Market multiples

■ Secondary refinements• Sensitivity and scenario analysis• Decision tree analysis and real options• Monte Carlo analysis

How conventional valuation models are challenged by the pharma model, as for instance: ■ Data samples and populations (e.g. on overall

amounts and timings of costs and revenues) too small, heterogeneous and idiosyncratically distrib-uted to be statistically useful

■ Conventional measures of mean and dispersion inoperable

■ Genuine comparability, between companies, be-tween deals, and between therapies, unduly elusive in practice

■ Conventional modelling techniques unable to ac-


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Valuing a Pharmaceutical Company

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commodate shifting levels of risk through the product life-cycle: inapplicability of standard CAPM and dividend-based model of expected returns

■ Lack of informed market consensus on criteria for analysis

■ Chronic tendency towards optimism in manage-ment commentary, e.g. on value of pipeline, stage of development, timing of launch and subsequent success in market

■ Shortcomings of the accounting regime in:• capturing relevant costs and accommo-

dating mismatch in timing of costs and revenues

• reaching consensus on intangible assets• resolving problems of business combi-

nations Finding a way forward ■ General principle: do as much work as possible

before confining one’s brain in the fixed con-fines of an Excel spreadsheet!

■ Strategic analysis of the relative strengths and weaknesses of the business to be valued and of the sector(s) in which it operates, using a standard framework such as Porter’s Five Forc-es

■ Bottom-up approach: refining institutional FCF into product-specific FCFs, using• Bottom-up estimates of revenue and costs

based on demographic, epidemiological and other factors:

• Product-specific rNPVs (risk-adjusted NPVs), instead of entity-wide NPV, with individual discount factors calibrated according to (i) costs, (ii) revenues and (iii) risks appropri-ate to individual major product characteris-tics at each stage of its life-cycle

■ Top-down approach: sense-checking the dif-ference between (a) market EV and (b) sum of the product rNPVs from the bottom-up ap-proach, by seeking possible reasons for• positive differences (e.g. pipeline, well-

struck balance between diversification and internal synergy, bargaining power in M&A market)

• negative difference (e.g. accident-prone management, above-average vulnerability to competitors, predators and government)

Bringing it all together – 1: Working with Excel

Basic tips and tricks for constructing an Excel-based valuation that is at once comprehensive, coherent, consistent and flexible

■ The template must be appropriate to the case, facilitating comparison with comparable cases and highlighting differences with contrasting cases

■ Line and column descriptions must indicate re-lationship between values: “Go and look at the formulae” is no way to treat grown-up readers

■ Assumptions (and variations of assumptions) must be highlighted

■ Sources and relative reliability of different data inputs must be highlighted

■ Top-level results must be summarised on front sheet, and indicate not only a point value but a range of values, as well as an indication of the principle parameters for the range

Bringing it all together – 2: Constructing a pharma valuation

Participants will work in small groups on a comprehensive valuation exercise under the close supervision of the trainer, who will help resolve individual problems while acting as a channel for sharing each group’s insights and experiences with the class as a whole.

The workshop concludes with presentations by one or more of the groups to the class as a whole, in an exercise designed not only to give them self-confidence in their technical skills but also to enhance their ability to communicate their findings to colleagues.


“Course material were interactive and independent”

”Interesting practical insight, discussions and examples”

”Case study very relevant”


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Valuing A Technology CompanyDate: 26 Feb 2018, 12 Nov 2018


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Course Overview

This course is ideal for those who are dealing with technology companies and need to gain an appreciation of their worth.

It focuses on the different techniques that can be deployed in assessing these companies, especially the real options approach which has achieved a wide degree of popularity. The course is also useful to those who are involved in any type of corporate transaction for technology companies from an advisory perspective.

Participants should be familiar with discounted cashflow techniques and have at least a basic understanding of business valuations.

Participants will be required to bring a laptop with a CD-Rom or USB connection to the course.

Defining the Problems ■ Differences between traditional corporate

valuation and technology valuation

■ Handling data problems that emerge with technology companies

■ Lifecycles and corporate cashflows ■ Review of DCF valuation techniques and

applications to technology businesses

■ Valuing early stage development businesses

Applying the DCF Model to Technology Companies ■ Estimating cashflows and expenditure pat-

terns ■ Evaluating the expected growth rate ■ Links to corporate strategic models ■ Combining growth rate with investment

intensity and return on investment

■ Applying the appropriate discount rate and varying the rate over time

■ Evaluating the stable growth stage and cal-culating the terminal value

■ Inherent problems of using the DCF model to value technology companies

Using Multiples in Technology Valuation ■ Importance of using EBITDA if possible, Us-

ing revenue multiples ■ Examining the broad range of possible com-

parisons ■ Using statistical analysis to improve the

multiple comparison ■ Pitfalls in using multiple approach for technol-

ogy companies

Using the Real Options Approach ■ The problems inherent in using the NPV/DCF

approach to valuation

■ Defining real options – patent rights, expan-sion option, abandonment option

■ Why real options are more applicable to tech-nology companies

■ Basics of real option valuation using binomial trees and a lattice approach

■ Financial option pricing (Black Scholes) and the link to real options

■ Management options and the value of strategic flexibility

■ Using real options approach to improve the un-derstanding of technology valuations


“Covers price vs value”

“A proactive course - helped challenge traditional methods & point out common

errors”

“Good discussions regarding the implications of difference techniques”


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Winning Corporate Finance BusinessDate: 16 May 2018


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■ ■

Why is pitching important? M&A is a competitive and crowded industry. Many advisers may be credible for any particular transaction: there is a real challenge for candidate advisers to differentiate themselves. Whether the client making the selection is inexperienced (such as an owner-manager) or a frequent buyer/ seller (such as a private equity firm), it can be hard for the client to identify the ‘right’ firm to execute the deal for them.

M&A, whilst challenging to execute, is popularly seen as lucrative, bringing high fees – but winning an M&A mandate is an intense process which can call for just as much effort as the transaction itself. Pitching is highly competitive and, done well, requires for a considerable amount of bespoke preparation.

In all areas of business, there are good pitches and bad pitches. What makes the difference? Learn about how what happens ahead of a pitch shapes the pitch meeting itself and can have a major impact on the outcome. Focus on areas to highlight in the pitch document, and the conduct of the pitch meeting itself. In addition to relevant expertise, success calls for considerable time and effort, astute judgement, strong relationship building and great teamwork.

Participants will:

■ Study the whole process from first contact with a potential client to winning the mandate ■ Focus on how to initiate and develop dialogue with a potential M&A client ■ Gain an understanding of all the tools which can be used to build the client relationship ■ Appreciate the best way to position and leverage your M&A expertise, ahead of a pitch meeting ■ Get to grips with the minutiae of preparing a pitch document ■ Explore what a good pitch document looks like ■ Develop ideas on the conduct of the beauty parade itself ■ Discuss what may influence decision making on the part of the acquiror/ vendor ■ Come away with a broader appreciation of how to position for and win corporate financial advisory

work

Course Overview

Course Content

Part one – before the pitch

■ Appointing an M&A adviser: the beauty parade as the tip of the iceberg

■ Who is or may be a seller? Is this transac-tion good business for our firm?

■ How to identify and qualify the opportunity ■ Understand the client: ■ Why are they selling (and why now/ soon) ■ Consider what they will most need from

their M&A adviser ■ It’s not just about the pitch; what can be

done ahead of time? ■ Focus on stakeholders. Who may influence

the decision?

■ Relationship building and positioning: how to develop this

■ Do your own research - a key potential differentiator:

■ Developing insight and understanding of the client

■ Gathering relevant information ■ Proprietary analysis ■ What is our firm’s relevant sector and

transactional expertise? ■ Ways of advancing your client relationships ■ Why are we the best M&A adviser? Building

competitive advantage: where can you aim to get to, pre-pitch?

■ Pitching started yesterday: anticipating the formal invitation


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Part two – the pitch document

■ A good start is vital: ■ Identify your project team – bring together

M&A and any other relevant disciplines ■ Brainstorming the content of the document ■ Ensure you are fully aligned to the ITT and

any process rules ■ Agree a clear roadmap from the outset: ■ Format and style of the document ■ Agreeing the fundamental messages ■ A detailed timetable ■ What areas are normally addressed in an

M&A pitch document? ■ Key areas to cover – allocating responsibil-

ities and ownership ■ Balance and perspective: ■ It’s not just about your firm, it’s about the

client’s business and deal ■ A customised document - no sausage ma-

chines! ■ What other advice may the client need? ■ Ensure you have all relevant areas of ex-

pertise covered ■ The importance of understanding how the

document may be used – and how this shapes content and presentation

■ Examples of smart content ■ Don’t undersell- presenting the wider team

and the whole firm’s relevant capability ■ Logistics - should never be overlooked!

Part three – the beauty parade

■ Who should attend? What is the optimal mix of attendees?

■ Ensuring correct expectations for all parties ■ Know the rules (timing, format) and cli-

ent’s expectations as to how you will en-gage and the ground to be covered – work to them

■ Use of the pitch document vs. stand-alone session• Visual aids?

■ What constitutes effective preparation?• Dry runs, full rehearsals, independent

challenge ■ The rules of good presenting

• A delivery which helps the client keep track and reinforces messages

• Personal conduct• Team behaviour in the meeting – how to

work together

■ Engaging with the client’s side – how to encourage dialogue

■ Key areas of focus• Be clear what you want to achieve

from the meeting, and what key mes-sages you want to convey ….

• …. but retain flexibility to adapt how you get your message across

■ Key messages to conclude: What is the optimal number?

■ Never leave the room without feeling you have given everything you wanted to share

Conclusion

■ What may happen next? ■ An understanding of client decision-mak-

ing ■ The fee negotiation ■ Exercise: preparing a pitch for two differ-

ent clients

Exercise

You will be presented with two very different types of client and asked to suggest what, in your view, should be emphasised in your approach to them as a potential client – both beforehand and in the pitch itself.

Followed by discussion of these suggestions, broad-ranging questions on the session, and concluding remarks.


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Tax Issues Affecting MBOsDate: 20 April 2018

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Location: London Price: £350 +VAT Membership Price: £280 + VAT

This course is intended to give those involved in MBO transactions an understanding of the taxation traps and planning opportunities that the tax legislation produces. The course will look at issues for the target business, those providing funding and, in particular, the management team. The potential charges under the employment-related securities legislation are particularly important for the latter.

As well as explaining the tax rules, importance compliance aspects, such as obtaining (where possible) HMRC clearance in advance of the transaction, will be discussed.

Tax issues affecting the target business ■ Acquisition of trade and assets or shares

in target? ■ Possible tax charges if target company

acquired ■ Preserving trading losses

• Problems caused by anti-avoidance rules

Taxation of Venture Capitalist/ Private Equity Funding ■ Tax treatment of debt and equity ■ Problems with “stranded interest” ■ Taxation of share buy-backs ■ Taxation of share sales

The tax treatment of managers’ shares ■ Interest on money borrowed to buy

shares ■ Capital gains treatment on eventual sale ■ Availability of relief under Enterprise In-

vestment Scheme and Seed EIS ■ Potential income tax charges under em-

ployment-related securities legislation ■ Complying with the conditions in the

memorandum of understanding between BVCA and Inland Revenue

Structuring ratchets to avoid income tax charges on the manager shares Using EMI options to recruit, retain and incentivise key staff ■ Qualifying companies ■ Conditions to be satisfied by employees ■ Exercise conditions, forfeiture, restric-

tions ■ Disqualifying events



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Due Diligence In Corporate Finance Transactions

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Course Overview

Due diligence is, more than ever, central to transactions. If it were ever a box-ticking exercise, it certainly is not one now. Even on a small to medium sized transaction (£20million or so) due diligence costs can exceed £500,000. Buyers know they need due diligence, but do they know how to get best value for it? A well-informed buyer will think hard about where due diligence should focus, and the scope of the diligence services it needs.

The main advisers - financial and legal - on transactions have a role to play too. The importance of directing the due diligence enquiries, and correctly interpreting the findings, goes to the heart of any deal. Good advice to the client will add value and help ensure a successful outcome.

For their part, many diligence providers have a high sense of commercial awareness. They welcome the chance to discuss key findings with their clients and are consistently trying to make their reports commercially focused, feeding directly to the value of a transaction.

The course is therefore designed to help clients and their advisers to understand how to approach the due diligence aspects of a transaction. It is no substitute for the role of diligence professionals, but it will give attendees a better understanding of what due diligence entails, how to engage with diligence providers, and how to manage the due diligence process. Starting with an explanation of due diligence itself, the course considers how due diligence is procured, tours the growing range of areas covered by due diligence, and concludes by explaining how the due diligence findings link in to other areas of a transaction.

There will be a strong emphasis on practical, real-world issues throughout, with key messages and learning points underpinned by examples from the trainer’s extensive experience.

The course is designed for those who may need to use due diligence in the course of these work, with particular reference to mergers, acquisitions and related financings. We will cover: ■ The origins and purpose of due diligence ■ The ever-widening scope of diligence work ■ Providers and delivery models ■ How due diligence fits into a range of transaction processes ■ The ways in which due diligence affects transaction outcomes ■ A sense of what due diligence may cost

The intention is to develop understanding, awareness and sophistication on the part of due diligence buyers and users.

Introduction ■ What is due diligence? ■ A due diligence defence ■ Suppliers ■ Users (bank lenders, private equity firms

and other providers of finance, as well as companies on behalf of their investors/ shareholders)

■ Who commissions and who pays ■ Liability of due diligence providers

Due diligence in the M&A timetable ■ The traditional process, with all buyers un-

dertaking independent due diligence

■ A process underpinned by vendor due dili-gence, prepared ahead of wider marketing

■ The pros and cons of VDD ■ Smart preparation: Adding value through

pre-transaction due diligence/ Sale readiness review

■ Phasing: the various stages of data release ■ The evolution of data rooms ■ Interaction with other areas of information

provision such as teaser, information mem-orandum, tours/ site visits, management presentations

■ Legal status of diligence reports ■ Due diligence from the target’s perspective;

managing the subject of the investigation

Date: 5 June 2018 Location: London Price: £675 +VAT

Membership Price: £540 + VAT


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Due Diligence In Corporate Finance TransactionsContinued

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The key areas of due diligenceAn overview of each area, reviewing the key areas of investigation and typical/ potential findings, including:

• Financial• Tax• Legal• Contracts• Plant and equipment• HR• Market, commercial and strategic analy-

sis• Brand strength• Customer referencing• Property and land use• IT• Operational analysis, e.g. benchmarking• Insurance• Pensions• Regulatory compliance• Reputational enquiries• People/ psychometric/ behavioural• Patents/ IP• Competition risk• Environmental• Resources/ reserves• Synergies analysis, costs and benefits• Separation analysis - Carve outs and

proformas• Reciprocal due diligence - on a buyer

where part of the consideration is in shares

■ Discussion will include key areas of focus, examples of discoveries and potential risk areas

■ Presentation of key findings

Vendor assistance services ■ Pre-sale preparation ■ Cleaning up businesses pre-sale ■ Financial presentation in a form suitable for

a transaction ■ Scope for value creation

How due diligence integrates with the definitive agreements and goes to value ■ Heads of agreement ■ The legal framework - SPA and disclosure ■ Representations and warranties ■ Locked box or completion accounts ele-

ments – net debt and working capital - final pricing

■ Potential for price chips ■ Earn-outs/ contingent consideration ■ Retentions and escrows ■ Indemnity

Capital markets transactions ■ Prospectus and sponsor’s role ■ Long form report ■ Working capital review ■ Consultants’ reserve reports ■ Statement of Benefits

Case studies

The course will include a range of case studies such as: ■ A classic financial due diligence package ■ Fuel delivery business - environmental due

diligence ■ Tax discoveries around loan note interest ■ Contracting business - due diligence to shape

the outcome on cash and working capital ■ Specialist retailer - commercial due diligence ■ Merged businesses - potential cost savings ■ Aerospace supply chain - strategic and com-

mercial ■ Petroleum consultants - assessment of oil &

gas reserves ■ Failed transactions - The risks and conse-

quences of limited/ incomplete due diligence

Conclusion ■ Relating costs to value ■ Trends in due diligence ■ The place of due diligence in your transactions ■ Managing due diligence providers ■ What buyers and other advisers should look

out for





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Accounting for Business Combinations (M&A) Training Course

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Course Overview

This intensive course is designed to give a comprehensive insight into the principles and practice of IFRS accounting and reporting for the full range of transactions under the general umbrella of M&A. In addition to transactions where there is a full change of control, it also considers transactions involving joint control and ‘significant influence’ (i.e. associate status) and transfers among each of these categories. Transactions are considered from the perspectives of all participants (i.e. selling and target entities as well as buyer).

The course will reflect the latest state of the following recently introduced or amended accounting standards and of emerging practice with regard to each of them:

■ IFRS 3 – Business Combinations ■ IFRS 10 – Consolidated Financial Statements ■ IFRS 11- Joint arrangements ■ IFRS 12 – Disclosure of Interests in Other Entities ■ IFRS 13 – Fair Value Measurement ■ IAS 27 – Separate Financial Statements ■ IAS 28 – Investments in Associates and Joint Ventures

The course will also offer a preview of the principal relevant changes resulting from the impending replacement of IAS 39 Financial Instruments: Recognition and Measurement by IFRS 9 Financial Instruments, as well as an insight into the main differences between IFRS as published by the IASB (‘full IFRS’) and the UK’s recently introduced FRS 102 and associated regulations (The New UKGAAP).

The course is interactive in approach and participants are encouraged to bring their own experience (and problems) to bear on group discussions and on the many (almost exclusively real-world) case studies and exercises with which the course is illustrated – and enlivened.

The concept of control

■ Parent and subsidiary undertakings ■ Special purpose entities and arrangements ■ Quasi-subsidiaries

• Review of key concepts for business combinations and associated transactions: principles and applications ■ ‘Control’ ■ ‘Significant influence’ ■ ‘Joint control’ ■ ‘A business’

Accounting for acquisition and disposal of full control ■ Deciding whether the subject is a business or

a collection of assets: pros and cons of each ■ Identifying the acquirer, the seller and the

date of acquisition

■ Identifying all assets and liabilities (including previously unrecognised intangibles)

■ Establishing fair values ■ Treatment of transaction costs ■ Calculating goodwill (also negative goodwill) ■ Acquiring control in stages ■ Treatment of deferred and contingent consid-

eration ■ Provisional and final valuations ■ Relinquishing control in stages ■ Transitions to and from associate or JV status ■ Accounting for acquisition in standalone ac-

counts of parent ■ Consolidation procedures

• Adjustment to parent company accounting policies

• Adjustment to fair values• Elimination of intercompany items• Non-controlling interests: share of net as-

sets or ‘full goodwill’ basis?• Allocation of goodwill across CGUs for fu-

ture impairment reviews• Treatment of foreign currency translation


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Accounting for Business Combinations (M&A) Training CourseContinued...

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gains and losses• Special cases – 1: Parent and subsidiary

with different functional currencies• Special cases – 2: Exemption for con-

solidation for assets held for resale• Special cases – 3: SPVs – consolidate or

not? Does accounting treatment neces-sarily follow regulatory treatment?

■ Disclosures:• Initial disclosure of the transaction itself• Subsequent disclosures, e.g. related

party transactions

Accounting for equity method investments – associated companies

■ Applying the ‘significant influence’ and ‘joint control’ criteria in practice: some ‘counter-intuitive’ cases

■ Equity accounting for associates in consoli-dated financial statements• Establishing the initial share of net as-

sets• Goodwill (initial and after subsequent

review)• Changes in value of share of net assets:

distributions• Elimination of proportion of intercompa-

ny profits and losses ■ Special considerations for accounting for

joint arrangements:• Joint operations or joint venture?• Equity accounting for joint venture (no

more ‘proportional consolidation’) ■ Transitions to and from associate/JV status

Some special topics

■ Secondary impact of transactions on eps, banking covenants, investor ratios and public perceptions

■ Impact of IFRS 13 Fair Value Measurement on initial accounting and on subsequent impairment and impairment reversal re-views

■ Hedging / hedge accounting for M&A transactions (under IAS 39 and IFRFS 9)

■ Hedging / hedge accounting for ongoing net investment in foreign undertaking (un-der IAS 39 and IFRS 9)

■ Overview of principal changes in IFRS 9 as regards accounting for ‘portfolio’ equity instruments:• introduction of new ‘Fair Value through

OCI’ category• new enhanced disclosure requirements• Exemptions available for ‘investment

entities’ and for sub-groups





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Advanced M&A ModellingIn-House

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Course Overview

This course follows on from the M&A modelling course and develops some of the principles previously covered but moves beyond simple synergy analysis to analyse other options available to an acquirer to extract maximum value post acquisition.

The course looks at more complex M&A transactions post acquisition including different types of disposals, asset sales, carve outs or trade sale/IPO and the process used to determine whether a disposal will enhance the value of an acquired business. Sometimes these disposals will be voluntary and sometimes forced through competition issues.

In each case the participants model the impact of the various types of transaction on a case company and assess the most appropriate transaction for the business. The course then examines the various issues associated with restructuring a business post acquisition as a means to extract value, including when restructuring is the best option and the forms of restructuring that can be considered. Each form of restructuring after an acquisition is again modelled using a case company.

This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in financial modelling.

By the end of this course participants will understand: ■ The decision making process for various types of value extraction post acquisition ■ How to model different types of value maximisation by way of disposal ■ The restructuring process for the capital structure of an acquired business and in which circum-

stances to apply it ■ How to model and assess different restructuring options

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse corporate transactions: ■ Building up from partially-complete models ■ Working with integrated financial statements ■ Running scenarios, iterating and optimising

Each participant should bring a lap top with USB port to the course to facilitate modelling

Refresher: Accounting for corporate transactions ■ Different types of transaction and how they are

modelled in practice ■ Consolidation accounting under the current IFRS

3 and IAS 27 ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting under

IFRS

Case study – The participants will model the initial acquisition transaction that will form the basis for the post acquisition analysis and value the combined business to arrive at a staring valuation

Overview of post-acquisition corporate transactions ■ Historic trends in corporate disposals ■ Involuntary disposals vs voluntary disposals ■ Reasons for voluntary disposals ■ Accounting for different types of disposal

• Asset sales• Partial disposal of equity• Full disposal of equity

■ Disposals, spin offs, carve outs and other disposal options

■ Restructuring and recapitalisation


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Disposal and spin off process ■ Disposal or spin off decision

• Completing the financial analysis ■ Formulation of the restructuring plan

• Relationship between the parent and subsidiary• Determining the assets and liabilities of the

disposal ■ Dealing with shareholders ■ Completing the deal

Financial evaluation of a disposal ■ Estimation of after tax cash flows ■ Determination of the disposal unit’s risk adjusted

discount rate ■ Present value of the disposal related cash flows ■ Assessing the market value of liabilities ■ Calculating disposal proceeds and value creation

Modelling asset disposal post- acquisition ■ Asset restructuring and value creation ■ Removing a diversification discount, additivity in

practice ■ Using equity to restructure, share repurchases ■ Asset disposals – the decision process and model-

ling a transaction

Case study – The participants will model the first approach to value creation post-acquisition transaction by reviewing an operating unit of the acquired business to determine whether to dispose of any of the assets of the unit by way of asset sale to enhance the value of the acquired business. The participants will then analyse the resulting business.

Modelling a spin off post- acquisition ■ Trends in spin offs, involuntary spin offs and de-

fensive spin offs ■ Potential tax issues with spin offs ■ Treatments of warrants and convertible securities ■ Seller financial assistance ■ Allocation of debt and bond obligations ■ Wealth effect of spins offs in capital markets

Case study – The participants will review the various subsidiaries of the acquired business to determine whether to dispose of any of the units by way of spin off to enhance the value of the acquired business. The participants will then model the spin off transaction and analyse the resulting business.

Modelling equity carve outs post- acquisition ■ Background to equity carve out in capital markets

• Characteristics of carve out firms• Use of carve out proceeds• Carve outs vs IPOs• Carve outs vs spin offs

■ Equity carve out or IPO – the decision process and modelling a transaction

Case study – The participants will review the various subsidiaries of the acquired business to determine whether to dispose of any of the units by way of carve out to enhance the value of the acquired business. The participants will then model the carve out transaction and analyse the resulting business.

Assessing asset restructuring ■ Sum of the parts valuation ■ Assessing restructuring costs and benefits ■ Undertaking a restructuring analysis for a business

• Sum of the parts valuation – multiples• Sum of the parts valuation – free cash flows• Valuing the effect of cost reduction• Monetising real estate• Share repurchases

■ Other options – voluntary liquidation or bust ups ■ Developing a restructuring plan for disposals

Case study – The participants will complete a series of case studies on various aspects of an asset restructuring. The participants will also analyse and assess the various restructuring options to determine which will create the most value.

Restructuring companies post acquisition ■ Overview of companies that may require restruc-

turing post acquisition• Types of business failure• Causes of business failure and options for deal-

ing with them• Bankruptcy trends• Dealing with financial distress

■ Framework for recapitalisations

Case study – The participants are introduced to a new transaction between a healthy and distressed company. The participants model the transaction and value the combined business.

Restructuring options post acquisition ■ Out of court workouts and bankruptcy

• Out of court workouts• In court reorganisation• Pre-packaged bankruptcy• Liquidation

■ Reorganisation vs liquidation ■ Reorganisation process – corporate control and

default ■ Accounting treatment

• Troubled debt restructuring• Asset impairment• Fresh start accounting

■ Valuing recapitalisations• Valuing new debt• Valuing equity• Recovery value• Recapitalisation rights and options

Case study – The participants model the various types of distressed company restructuring options and determine which option is preferable. The participants also value different elements of the post- acquisition transactions to assess various recapitalisation options.


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Financial Statement and AnalysisA 3 Day Course

In-House

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Course Overview

This course:

■ Provides an introduction to the basic principles and practice of financial accounting and report-ing

■ Combines theoretical rigour with a strong element of everyday commercial reality and a wealth of practical detail

■ Is slanted towards the needs of users rather than preparers

It therefore present not only a beginner’s course in bookkeeping for historic transactions, but also a primer on the objectives, conventions, methods and limitations of financial reporting, as a future-orientated aid to decision making by external stakeholders, such as equity shareholders, investment analysts, lenders, and credit risk managers;

■ Assumes no prior technical knowledge of accounting or bookkeeping

However, participants are expected to have a general appreciation of the concept of profit and loss, and of a business or other organisation as a legal entity (referred to as “the entity” in what follows) distinct and separate from its owners or controllers

■ Is presented at a basic level where the nuances of the differences between IFRS, US GAAP and other national accounting frameworks rarely matter

But in the interest of consistency and transparency, it is presented throughout in accordance with the principles and terminology of IFRS. This can of course be adjusted in the light of the specific situation and preference of the client.

Regulatory environment

■ Companies Act 2006 categories of compa-ny and the basic framework; SME, other private and listed

■ What is defined as ‘listed’ for different re-porting purposes; Companies Act, APB, ASB

■ Summary of listing requirements for annual and interim reports for Full, AIM and Plus listed companies

■ IFRS/ UKGAAP options and the implications of joining and moving between markets

■ Accounting changes – update on option to move to IFRS and planned concessions for qualifying subsidiaries

■ Options within IFRS and UKGAAP Standards – overview

■ Latest changes to accounting for business combinations – the new test for control

Narrative reports

■ Accounting policies and uncertainties – the basic requirements

■ Directors report contents and the review of the business

■ Operating and financial reviews ■ Other additional statements and summaries

– regulatory framework and reporting obli-gations

■ Review of latest proposals for strategic re-port

Directors and management information

■ Directors’ interests, changes in directors, loans and other transactions with directors and other key reportable events

■ The directors’ remuneration report; legal, listing and accounting disclosure obligations – including for share option arrangements

■ Proposal for high level summary remunera-tion report

■ Corporate governance statements and the obligations of management and advisors

Additional listed company statements

■ Segmental reporting obligations


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Financial Statement and AnalysisA 3 Day Course

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• Single segment businesses; and• Information that is commercially damag-

ing ■ Interim reports

• Required format and contents• Variations from year end policies permit-

ted

Other reporting concessions and options

■ Related party transactions and the exemp-tion for wholly owned subsidiaries

■ Consolidated and individual company state-ments of cash flow

■ Group and holding company profit and loss statements

■ Statutory concessions and exemptions from consolidation for example

■ Planned concession from audit for qualify-ing subsidiaries

Concluding points

■ Future developments and plans – the future for UKGAAP (overview)

■ Key contentious issues for advisors

Objective of financial accounting and reportingTo record, in an orderly and systematic way, historic transactions and other events that may

■ provide information that is relevant to the amount, timing and uncertainty of the enti-ty’s future cash flows;

■ have effects on the entity that are reliably measurable in financial terms and

■ be useful to external stakeholders in mak-ing decisions about the future, and spe-cifically in decisions to provide financial resources to the entity.

Basic conventions of financial accounting and reporting

■ The entity principle: the entity has definite boundaries and is separate from its owners, managements, controllers and sponsors

■ The accruals principle: transactions are recorded when the entity becomes a party to them, and not when any associated cash flows might occur

■ The going concern principle: it is assumed that the entity will not have to liquidate or curtail its operations in the near future

■ The reliable measurement principle: trans-actions and events are usually recorded only when and to the extent that their im-pact can be reliably measured in financial terms. This is a severely limits the ability of financial accounts to present what is commonly called ‘the whole picture’ of an entity

Distinction from management accounting

■ Financial accounting is primarily designed to inform outsiders about the implications of historic transactions and events on the financial condition (balance sheet), finan-cial performance (income statement) and cash position (cash flow statement) of the entity;

■ Management accounting is primarily de-signed to assist management in running the entity more profitably and efficiently, and is therefore not confined to financial measures but contains much non-financial information, e.g. about the volumes and make-up of goods and services, the time taken by processes etc.

The method of financial accounting (so-called ‘double-entry bookkeeping’) :

■ Financial accounting is a process that trac-es• the inflow and outflow of resources (as-

sets) into and out of the entity;• increases and decreases in the entity’s

obligations (liabilities) to third parties; and

• the impact of a) and b) on the entity’s owners’ residual economic interest in it (equity)

■ Every transaction or other relevant event impacts the entity’s resources and/or the entity’s obligations and/or the entity’s owners’ residual interest in it, in two sepa-rate ways

Exhaustive practical exercises in the basic recording of a wide range of transactions and events:

■ Sales: for cash, on credit, and prepaid ■ Purchases and other direct costs incurred:

for cash, on credit, and prepaid ■ Resources and obligations that impact

more than one accounting period (capex and depreciation, prepayments, accruals






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Financial Statement And AnalysisA 3 Day Course


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and deferred income) ■ Real estate transactions: purchases, sales,

sales and leasebacks, rent and other incen-tives

■ Obligations that are uncertain in timing or amount (provisions)

■ Changes in the economic value of resources (writedowns of inventory and receivables, revaluation of real estate and other assets)

■ Intangible assets and the special restric-tions on their recognition

■ Sales taxes and taxes on the entity’s own profit

■ Reconciling external confirmations to inter-nal records, e.g. bank statements

Preparing the period-end financial statements:

■ The income statement• Sales and direct expenses, leading to

gross profit• Other operating income and expense,

leading to operating profit• Finance income/expense, leading to pre-

tax profit• Taxation charge for the period, leading to

net income ■ The balance sheet (components, definitions

and layout)• Assets

■ Current ■ Noncurrent

• Liabilities ■ Current ■ Noncurrent

• Net assets• Shareholders’ equity

■ Share capital and premium ■ Retained earnings ■ The cash flow statement

• Method of preparation ■ Direct ■ Indirect

• Structure ■ Cash flow from operating activities ■ Cash flow from investing activities ■ Cash flow from financing activities

An introduction to elementary financial analysis

■ The uses and limitations of financial ratios: developing simple metrics to track• Operating profitability (e.g. gross and

operating profit, return on sales)• Operating efficiency (asset turnover/

utilisation)• Overall profitability (e.g. return on capi-

tal employed, return on equity)• Liquid assets and liabilities: volume and

velocity of conversion/circulation)• Cash flow coverage of fixed charges• Solvency: leverage and gearing





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IFRS Accounting for Transactions in Corporate Control (M&A)

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Course Overview

This intensive course is designed to give a comprehensive insight into the principles and practice of IFRS accounting and reporting for the full range of transactions under the general umbrella of M&A. In addition to transactions where there is a full change of control, it also considers transactions involving joint control and ‘significant influence’ (i.e. associate status) and transfers among each of these categories. Transactions are considered from the perspectives of all participants (i.e. selling and target entities as well as buyer).

The course will reflect the latest state of the following recently introduced or amended accounting standards and of emerging practice with regard to each of them:

■ IFRS 3 - Business Combinations ■ IFRS 10 - Consolidated Financial Statements ■ IFRS 11- Joint arrangements ■ IFRS 12 - Disclosure of Interests in Other Entities ■ IFRS 13 - Fair Value Measurement ■ IAS 27 - Separate Financial Statements ■ IAS 28 - Investments in Associates and Joint Ventures

The course will also offer a preview of the principal relevant changes resulting from the impending replacement of IAS 39 Financial Instruments: Recognition and Measurement by IFRS 9 Financial Instruments, as well as an insight into the main differences between IFRS as published by the IASB (‘full IFRS’) and the UK’s recently introduced FRS 102 and associated regulations (so-called ‘IFRS-lite’).

The course is interactive in approach and participants are encouraged to bring their own experience (and problems) to bear on group discussions and on the many (almost exclusively real-world) case studies and exercises with which the course is illustrated - and enlivened.

The concept of control ■ Parent and subsidiary undertakings ■ Special purpose entities and arrangements ■ Quasi-subsidiaries

Review of key concepts for business combinations and associated transactions: principles and applications ■ ‘Control’ ■ ‘Significant influence’ ■ ‘Joint control’ ■ ‘A business’

Accounting for acquisition and disposal of full control ■ Deciding whether the subject is a business

or a collection of assets: pros and cons of each

■ Identifying the acquirer, the seller and the date of acquisition

■ Identifying all assets and liabilities (including previously unrecognised intangibles)

■ Establishing fair values ■ Treatment of transaction costs ■ Calculating goodwill (also negative goodwill) ■ Acquiring control in stages ■ Treatment of deferred and contingent con-

sideration ■ Provisional and final valuations ■ Relinquishing control in stages ■ Transitions to and from associate or JV sta-

tus ■ Accounting for acquisition in standalone ac-

counts of parent ■ Consolidation procedures

• Adjustment to parent company accounting policies

• Adjustment to fair values• Elimination of intercompany items• Non-controlling interests: share of net as-

sets or ‘full goodwill’ basis?• Allocation of goodwill across CGUs for fu-

ture impairment reviews• Treatment of foreign currency translation

gains and losses• Special cases – 1: Parent and subsidiary

with different functional currencies• Special cases – 2: Exemption for consoli-

dation for assets held for resale• Special cases – 3: SPVs – consolidate or

not? Does accounting treatment necessari-ly follow regulatory treatment?

■ Disclosures:• Initial disclosure of the transaction itself• Subsequent disclosures, e.g. related party

transactions

Accounting for equity method investments ■ Applying the ‘significant influence’ and ‘joint

control’ criteria in practice: some ‘counter-in-tuitive’ cases

■ Equity accounting for associates in consoli-dated financial statements• Establishing the initial share of net assets• Goodwill (initial and after subsequent re-

view)• Changes in value of share of net assets:


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distributions• Elimination of proportion of intercompa-

ny profits and losses ■ Special considerations for accounting for

joint arrangements:• Joint operations or joint venture?• Equity accounting for joint venture (no

more ‘proportional consolidation’) ■ Transitions to and from associate/JV status

Some special topics ■ Secondary impact of transactions on eps,

banking covenants, investor ratios and public perceptions

■ Impact of IFRS 13 Fair Value Measurement on initial accounting and on subsequent impairment and impairment reversal re-views

■ Hedging / hedge accounting for M&A trans-actions (under IAS 39 and IFRFS 9)

■ Hedging / hedge accounting for ongoing net investment in foreign undertaking (un-der IAS 39 and IFRS 9)

■ Overview of principal changes in IFRS 9 as regards accounting for ‘portfolio’ equity instruments:• introduction of new ‘Fair Value through

OCI’ category• new enhanced disclosure requirements

IFRS Accounting for Transactions in Corporate Control (M&A)





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Banks Financial Statement Analysis - BasicIn-House

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This training allows participants to develop an initial understanding of banks’ financial statements. Specifically, through a mix of lecture, case studies and Excel modelling, the workshop will equip participants to:

■ Review the accounting of banks’ financial statements; ■ Understand the banking book and introduce the new IFRS 9 loan loss impairment methodology; ■ Analyse the accounting treatment of financial instruments including amortised costs, FVTPL (Fair

Value though Profit & Loss) and FVTOCI (Fair Value through Other Comprehensive Income); ■ Review IFRS shareholders’ equity and the reconciliation to CET1 (Common Equity Tier I), Tier I

and Total Capital; ■ Analyse the key banking ratio including growth, performance, asset quality, liquidity and capital

ratios.

Session 1 Introduction to Financial Statement Analysis for Banks ■ Balance sheet ■ Income statement ■ Cash flow statement ■ Statement of change in shareholders equi-

ty/comprehensive income

Case Study #1: participants will review Barclays’ financial statements

Session 2

The Banking Book

■ Types of banking books• Mortgages• Credit cards• Personal loans• SME loans• Corporate loans• Syndicated loans

■ On balance sheet or securitised ■ Amortised cost methodology ■ Credit Issues and collateral ■ Non-performing loans ■ Introduction to loan loss impairment under

IFRS 9 and the three stages

Session 3

Financial Instruments

■ Amortised Costs ■ Fair value through Profit & Loss (FVTPL) ■ Fair value through Other Comprehensive In-

come (FVTOCI) ■ Accounting treatment determined by (i) busi-

ness model (ii) nature of cash flows ■ Decision tree to decide on classification of

financial instruments

Case Study #2: participants will be presented with a few financial instruments and will classify them in their relevant categories

■ Balance sheet and P&L calculation of a bond at amortized cost• Based on the Internal Rate of Return (IRR)

of future cash flows• Treatment of fees in the IRR calculation

■ Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI• Effective interest rate method for interests

(same as amortised costs)• Unrealised gain based on NPV at current

yield of future cash flows

Case Study #3: participants will compute on Excel the impact on balance sheet and P&L of a bond under amortised costs and FVTPL


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Session 4 Shareholders’ Equity

■ IFRS shareholders’ equity and treasury shares

■ Common Equity Tier 1 (CET1), Tier 1, Tier 2 and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, de-ferred tax, changes to investment portfo-lio, etc.

Case study #4: Review Barclays’ Shareholders Equity to Tier I reconciliation

Session 5 Bank Ratios

■ Growth ratios• Loans and deposits• Assets and RWAs• Revenues and costs

■ Performance ratios• Net interest income, net interest expense

and net interest spread• Cost to income ratio• Return on equity, return on assets, return

on RWAs ■ Asset quality

• NPL ratio• NPL coverage

■ Liquidity ratios• Loan to deposit• Liquid asset to short-term wholesale fund-

ing ■ Capital ratios

• CET1 ratio• Total capital ratio

Case study #5: Compute all ratios on Barclays’ latest financial statements




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Banks Financial Statement Analysis - AdvancedIn-House

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Course Overview

This training allows participants to build a structured approach to the analysis of banks’ financial statements. Specifically, through a mix of lecture, case studies and Excel modelling, the workshop will equip participants to:

■ Review the accounting and valuation of banks’ financial statements; ■ Understand the banking book and the new IFRS 9 treatment for loan loss impairment using the

expected loss methodology; ■ Analyse the accounting treatment of financial instruments including amortised costs, FVTPL (Fair

Value though Profit & Loss) and FVTOCI (Fair Value through Other Comprehensive Income); ■ Review trading and hedging of derivatives under the new IFRS 9 rules; ■ Analyse financial liabilities at amortised cost and FVTPL including fair value for own credit; ■ Understand IFRS shareholders’ equity and the reconciliation to CET 1 (Common Equity Tier I),

Tier I and Total Capital.

Session 1 Introduction to Financial Statement Analysis for Banks ■ Balance sheet ■ Income statement ■ Cash flow statement ■ Statement of change in shareholders equi-

ty/comprehensive income

Case Study #1: participants will review Barclays’ financial statements

Session 2

The Banking Book

■ Types of banking books• Mortgages• Credit cards• Personal loans• SME loans• Corporate loans• Syndicated loans

■ On balance sheet or securitised ■ Amortised cost methodology ■ Credit Issues and collateral ■ Non-performing loans

Session 3

Loan Loss Impairment

■ Incurred losses (IAS 39) has been replaced by expected losses (IFRS 9)

■ Three stages process to determine impair-ments• Stage 1: “12-month expected credit loss-

es” with effective interest rate on gross on gross carrying amount

• Stage 2: “life-time expected credit losses” with effective interest rate on gross on gross carrying amount

• Stage 3: “life-time expected credit losses” with effective interest rate on gross on amortised costs

Case Study #2: participants will assess the credit deterioration of a loan

Session 4

Financial Instruments

■ Amortised Costs ■ Fair value through Profit & Loss (FVTPL) ■ Fair value through Other Comprehensive In-

come (FVTOCI) ■ Accounting treatment determined by (i) busi-

ness model (ii) nature of cash flows ■ Decision tree to decide on classification of

financial instruments

Case Study #3: participants will be presented with a few financial instruments


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Banks Financial Statement Analysis - Advanced


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and will classify them in their relevant categories

■ Balance sheet and P&L calculation of a bond at amortized cost• Based on the Internal Rate of Return (IRR)

of future cash flows• Treatment of fees in the IRR calculation

■ Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI• Effective interest rate method for interests

(same as amortised costs)• Unrealised gain based on NPV at current

yield of future cash flows ■ Fair value assessment

• Level 1 based on unadjusted quoted price• Level 2 based on quoted price in inactive

markets or observable model input• Level 3 based on unobservable but signifi-

cant inputs to the overall value

Case Study #4: participants will compute on Excel the impact on balance sheet and P&L of a bond under amortised costs and FVTPL

Session 5

Derivatives

■ Trading and hedging ■ Hedge accounting: fair value, cash flow and

net investment ■ Netting derivative assets and liabilities ■ Qualification for hedge accounting

• Cash flow hedge• Fair value hedge• Net investment hedge for foreign subsidi-

aries

Case Study #5: participants will classify a few hedging transactions in their relevant categories

Case Study #6: participants will value an interest rate swap accounted for as a cash flow hedge

■ IFRS 9 hedge accounting more closely aligned to risk management policy• Removal of hedge effectiveness criteria

(80% to 125%)• Extends eligibility of risk component to

include non-financial items • Permits aggregate exposure that includes

a derivative to be eligible hedged item• Group of items and a net position (e.g.

assets & liabilities or forecast sales & pur-chases) hedged collectively as group

■ Accounting treatment for time value of money for options: a two-step process through OCI

■ Accounting treatment for foreign currency for-ward points in OCI

Case Study #7: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position

Session 6 Financing: Debt and Equity

■ Financial liabilities at amortised cost or FVTPL• Own credit deterioration reduces institu-

tions’ liabilities• Liability reduction due to rating downgrade

to be now classified in OCI ■ IFRS shareholders’ equity and treasury shares ■ Common Equity Tier 1 (CET1), Tier 1, Tier 2

and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, deferred tax, changes to investment portfolio, etc.

■ Overview of calculating risk weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk

Case study #8: Review Barclays’ Shareholders Equity to Tier I reconciliation




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Legal Due DiligenceIn-House

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Course Overview

This course covers the practices and procedures involved in legal due diligence in corporate finance transactions. This includes issues relevant to M&A transactions.

The areas of legal risk, which may arise, and the documents which should be reviewed, will be considered.

Participants will identify the key issues to be considered in reviewing legal due diligence information.

The course will enable delegates to:

■ Understand the purpose and limitations of legal due diligence ■ Identify the key issues which may arise ■ Conduct a legal due diligence exercise in an organised and efficient manner ■ Understand the different perspectives of the parties to the transaction in relation to legal due

diligence

Introduction

■ What is due diligence? ■ The objective of due diligence ■ In which situations Is due diligence needed ■ Common problems associated with diligence ■ Common errors made by the purchaser dur-

ing the due diligence investigation ■ Compatibility with investment objectives

Planning due diligence

■ Risk assessment and scope ■ Time and cost ■ Staffing ■ Management and analysis

Conducting due diligence

■ Preliminary due diligence ■ Approaching the target ■ Requesting data ■ Misleading information

Constructing the checklist

■ Design ■ Industry-specific matters

Due diligence from a legal point of view

■ General legal issues ■ Ownership and capital structure ■ Management ■ Products and services ■ Debt and banking

R&D and technology considerations


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Private Company Sales in the U.S and UK

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Course Overview

Oscar Wilde is reputed to have said “England and America are two countries separated by the same language”. The same could be said of the differences in the M&A process. This course contrasts the market-based customs and practices of US and UK custom with respect to the M&A process and some of the key legal differences in relation to the sale and purchase of shares of private companies together with some references to related agreements. Whilst the practices and customs that apply to U.S. deals are largely the same across the Continental U.S. (and Canada to some extent), the U.S. is a federal system and there are differences in law and practice between the various states. In this context, references to U.S. law largely refer to New York law, and (where relevant) to Delaware law with some references to Californian law.

Globalization and the influence of the European Union means that, despite civil law dominating Eu-rope, many of the practices and customs in relation to M&A are broadly similar in the UK and Europe law, so reference is made to civil law systems where these differ from English law (e.g. re duty to negotiate in good faith).

The programme does not attempt to offer a linear approach and contrast all the key differences in all customs and practices (e.g. Locked Box remains much rarer in the U.S. than Europe), but simply those where law and practice differs significantly.

This course was originally developed for a U.S. investment bank looking to provide their staff with a sound basis on the legal aspects as well as the commercial customs in M&A deals in the U.S. and Europe. In this context it will appeal to lawyers, corporate finance advisors, bankers, accountants and corporates looking in M&A or related activities.

General matters ■ U.S. is a Federal system – so different states

have different approaches• The Big Three - NY law, Delaware, Califor-

nia ■ Terminology - key differences ■ Formalities – key differences ■ General principles of interpretation

• U.S. law• English law• European law

■ What types of Efforts/ Endeavours• English law (review of relevant case law)• NY law (review of relevant case law)• California• Impact on the deal

■ Negligence • English law - Gross negligence and willful

misconduct• NY law – ordinary & gross negligence and

willful misconduct• Duty to negotiate in good faith (review of

relevant cases) ӹEnglish law ӹNY law ӹEuropean approach

■ Damages & Liquidated damages & Penalty clauses• English law approach • Historical position• Cavendish Square case • Lessons and implications from Cavendish

Square• NY law approach

■ Approach to CPs – English law vs NY• Passage of risk - – English law vs NY

Exclusivity Agreements vs No shop No talk ■ UK approach – Exclusivity agreements gen-

erally ■ U.S. approach

• No Shop• No Talk• Gemini vs Ameripark – Lessons from the

case Heads of Agreement ■ English law

• Key requirements• The “essential” terms• The “subject to contract” trap

■ NY law• Type 1 – the 4 key factors per Vacold v

Cerami • Type 2 – the 5 key factors

■ California law• Key requirements

■ Delaware law• Summary of current position• Lessons from the SIGA case • How to avoid the pitfalls

Representations ■ General difference between English law vs

U.S. (NY) approach re “representations and


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Private Company Sales in the U.S and UK

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warranties”• Representations in English law• Representations in U.S. (is it that differ-

ent?) ■ Non-contractual representations and waiver

of liability for fraud - three key clauses• Entire Agreement• Non-reliance• Exclusive remedies

■ Approach under English law & key cases (e.g. Witter, Grimstead)

■ Position in NY (Danann and Grumman cas-es)

■ Position in Delaware (ABRY case)Warranties & Indemnities – U.S. vs English law ■ Scope of Representations & Warranties gen-

erally - U.S. vs UK ■ Quantification of damages for breach of

warranty/representation ■ Buyer’s Knowledge & materiality ■ Materiality “scrapes” (U.S.)

• Defined• Application• Ramifications• Seller v Buyer arguments

■ Potential liability – FSA vs Rule 10b-5 (Se-curities Exchange Act)• Key aspects for Rule 10b-5

■ Indemnities• Approach in England• Approach in U.S.

Limitations on liability ■ UK approach

Value as is and value as warrantedWarranty insurance

■ U.S. approachGreat use of Escrow: key negotiation issues for the

parties ■ Four potential problem areas (U.S.) – FBAR

Regs., Definitions, HYC, Domicile ■ Procedures for release of funds ■ How many escrow accounts ■ Dispute Resolution – UK vs U.S.

Disclosure - Practice in U.S vs UK ■ General differences in approach to due dili-

gence ■ General vs Specific disclosures ■ Disclosure bundle and disclosure of the data

room ■ Scope of specific disclosures - effectively

disclosed against ALL warranties, cross-ref-erencing

■ Disclosure qualifies all vs specific warranties ■ Buyer’s knowledge

• Standard in England vs U.S approach ■ Sandbagging and Anti-sandbagging

• Three approaches• U.S. case law• UK approach and case law

Split Signing / Completion MAC/MAE clauses ■ Completion conditions generally – U.S. vs

UK ■ Financing conditions generally

• UK• U.S. SunGard issues - “Typical” require-

ments• Other aspects – reverse transaction fees,

specific performance ■ Repetition of warranties/representations at

Financial close / Completion ■ Different approaches in the U.S. - warran-

ties true “in all material respects” or MAC standard

■ Approach in UK ■ MAC/MAE clauses

• Position in UK• Position in U.S. generally

ӹDifferent approaches - part of “Termina-tion” clause vs Stand-alone clause ӹReview of U.S. MAC clauses ӹPosition in Delaware (review of cases) ӹPosition in NY (review of Inkeepers Trust case)

Other matters ■ Stockholder Representative Agreements ■ Hart-Scott-Rodino


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Public to Private Takeovers

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Course Overview

This course examines the key Takeover Code Rules which affect Public to Private bids and how they affect the strategies and tactics that the PTP bidder may wish to use in its approach to the takeover.

The Takeover Code: Conduct of Offer ■ The UK takeover framework ■ Legal, UKLA and Takeover Code provisions

Key rules for the conduct of public bids ■ Announcements

• When possible/firm offer announcements are required

• Advisers’ responsibilities for announce-ments

• What is an untoward share price move-ment?

• Disclosures following announcements • Naming and Put Up or Shut Up • Contents of firm offer

ӹCertain funds ■ Conditions/pre-conditions

• When can they be subjective? • When can they be invoked? • What pre-conditions are possible in firm

offer announcements? ■ Minimum consideration following market

purchases ■ Restrictions

• No special deals • Management incentivisation in PTPs

ӹDisclosure ӹPanel consultation ӹShareholder vote

• Frustrating actions and exceptions ■ Squeeze out requirements ■ Overview of recent changes to rules ■ Types of takeover

• Offer statistics • Contractual offer timetable • How hostile offers are played out • Timetables in competitive situations • Development of Schemes of Arrangement • The rules for Schemes and timetable • Mandatory offer and whitewash require-

ments and uses • Partial and tender offers – rules and

when they are useful ■ The offer document

• Views of independent directors • Financial information on the offeror • Financing of offer • Profit forecasts • Revised offers

• Statements of intention

Public Takeovers: Strategies and Tactics ■ Changes in marketplace which have affected

takeovers

Bidder Strategies and Tactics ■ Buying share stakes in Target

• Advantages of buying share stakes before and during bid

• Risks of buying stakes • Restrictions on stake-buying and regula-

tory requirements • Methods of acquiring stakes • Is it worth holding a large minority stake?

■ Irrevocable undertakings • Advantages of holding irrevocables • Attitude of shareholders • Hard and soft irrevocables • Non-binding letters of intent

■ Impact of Takeover Code changes • Return to traditional bid approach • Effect of 28 day PUSU and naming • Work which needs to be done before ap-

proach • Friendly negotiations or hostile offer? • Possible offers and bear hugs

■ Timing considerations of firm offer an-nouncements and bid • Issues if US shareholders are present

■ Structure: Scheme of Arrangements or Offer • Advantages and disadvantages compared

to contractual offer • Examples of Schemes/offers meeting

shareholder opposition • Examples of Schemes in competitive situ-

ations ■ Cash or share offer?

• Advantages/disadvantages of cash and shares

• Different mixes of consideration • Cash alternative structures • Other financing structures • Means of using foreign shares

■ Care with statements and information • Price and other future actions • Equality of information

ӹCompeting offerors ӹ Information to independent directors in


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Public to Private Takeovers

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PTPs ■ Concluding the offer

• When to increase offer • Are no increase / no extension state-

ments useful?

Response to PTP bid approach ■ Independent directors and advisers ■ Restrictions on offeree’s actions ■ Negotiate, open books or make possible

offer announcement? ■ Effects of a possible offer announcement

and timing


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The Distressed Disposals TrainingKey Negotiating Aspects

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Course Overview

Companies facing financial difficulties face three options: flog, fix or fail (close). Often a restructuring will involve a mixture of both debt restructuring accompanied by a sale of part or, occasionally, all of the business. M&A is a challenging process in normal conditions; however, selling a business in a distressed scenario is fraught with difficulty and presents a raft of challenges over and above a sale in the ordinary course. In an ideal world the sellers will seek to execute a sale outside and before any formal insolvency process (Administration) however, in some cases this may not be possible. The programme focuses on the challenges of selling a business both before the imposition of a formal insolvency process and also after Administration via a pre-packages sale. Interestingly pre-packs have been used in jurisdictions other than the UK; namely Holland, Luxembourg and Germany.

This programme aims to identify the typical issues which parties are likely to encounter in the process and provides a route map on how these might be resolved. The programme adopts a generic approach which is relevant to stakeholders who may have an interest in these types of transactions including; lawyers, financial advisers, senior and junior lenders, accountants and owners.

The problems typically include the nature of the sale process, the structure of the deal and the manner in which the consideration is to be paid (deferred methods are unattractive at best). For the buyer problems arise through the absence of warranties coupled with the limited due diligence which is conducted owing to timing pressures.

In addition, the sale is also open to a number of additional impediments not present in more normal circumstances; attempts by (competing/trade) buyers to wind down the clock, difficulties with valuing the target if that is itself distressed, the ever-present risk of Directors’ fiduciary duties which become more relevant in distress.

Initial considerations in accelerated/distressed disposals

■ Background issues ■ Target’s situation

• Distressed seller• Distressed target

■ Exploring the Seller’s options – to mitigate risk• Dual / triple track approach: sale, equity

injection, debt restructuring ■ Summary of key differences to “non-dis-

tressed” M&A• Deal structure• Tax• Key contracts – mitigating termination risk• Pensions/ Employees• Claw-back risk

Valuation issues and risk for Directors

■ Importance of the valuation• Special considerations in distress • Establishing the value of the Target (the

fulcrum capital vis-à-vis other stakeholders)• Due diligence issues

■ Issues for the (Sellers’) Directors• Fiduciary duties• Summary of position in key European juris-

dictions (Sweden, Norway, France, Germa-ny, Lux, Spain)

■ Key risks• Vulnerable transactions• Transactions at an Undervalue• Preferences• Review of position in key European jurisdic-

tions ■ Steps to mitigate risk & subsequent challenges

by Liquidators post Formal Insolvency


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The Distressed Disposals TrainingKey Negotiating Aspects

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Other impediments / considerations in re Stake-holder issues

■ Issues arising from the Senior Secured lenders - issues affecting the sale• Structure of the loan• Syndicated/Club deal - issues• Bilateral loan - issues

■ Impact of the Junior Secured lenders• Critical issues In the Inter-creditor • Where to focus -release of collateral con-

trol over the agent ■ Junior-Unsecured Lenders – limited lever-

age available ■ Getting Bond-holders’ approval – key issues

• Who are they• Co-ordinating action• Exit consents – dealing with hold-outs• Market Abuse Directive issues

■ Shareholders• Issues with split shareholdings• Dealing with Management

■ Other key stake-holders – tactics for man-aging• Landlords• Aggressive creditors

■ Special considerations for Listed Companies• Disclosure• Approvals• Market Abuse Directive issues

■ Employee Rights / Issues • EU Acquired Rights Directive & TUPE• Pension matters

■ Regulatory / Competition Authority issues

Structuring the Deal

■ The Purchaser’s perspective & approach • Structure of the deal

■ Seller issues & preferences• Structure of the deal – issues favouring a

share purchase• Issues favouring an asset purchase

■ Sale process - methods• Traditional auction• Mini-auction• Accelerated/ fast-track auction• Sealed bids / tender• Stalking horse method

■ Special considerations for distressed sales• Managing the bidders• Dealing with competitors – key role of

confidentiality• Tactics for avoiding value destruction

■ Structuring the deal methods• Shares vs Assets• Hive-downs• Schemes of Arrangement (apply to non-

UK companies with UK connection)

• Acquiring control via a loan-to-own ■ Methods of structuring the Consideration –

pros & cons• Cash • Deferred consideration• Other methods of closing the value gap

Special considerations for Insolvent / distressed sales

■ Insolvency practitioners’ locus standi ■ Warranties & Indemnities – the value gap ■ Warranty Insurance, Escrow Accounts ■ Transitional Service Agreements

• Key features• How they can help – pros & cons• Seller issues• Buyer issues

■ Asset sales• Identification of assets• Delivery of assets

■ Third Party Agreements• Customers & supplier issues• Leased Plant & Equipment• Leased premises• Licences• Inventory – retention of title• Book debts• Real property

Pre-packaged sales in UK & some European Jurisdictions

■ Sale under formal Insolvency process –con-trasted with non-insolvency sales

■ Pre-packaged sales generally• What are they• How are they achieved• Where can they be used• Pre-packages sales in UK • Pre-packaged sales in Europe (Lux, Hol-

land, Germany) ■ Five advantages of using pre-packs ■ Disadvantages of pre-packs ■ Types of pre-packs / mechanics of the pro-

cess• Operational• Financial





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Course Content

Valuing Commodity Companies and Sectors

In-House

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Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value sectors which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the sector in which the company operates.

The course covers commodity companies, identifying the issues with sectors such as resources, energy and chemicals companies. As well as discussed some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken.

Examples are provided to illustrate each issue.

Participants will be required to bring a laptop to the course.

Overview of valuation approaches

■ Intrinsic valuation – traditional cash flow techniques

■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value cre-

ated through optionality

Other valuation issues

■ Assessing risk – the risky risk free rate and other current valuation issues

■ The economic cycle – incorporating mac-ro-economic factors into a valuation

Valuing commodity companies and sectors

• The demand and supply fundamentals• The macro point of view

■ Valuing a commodity business in practice• Normalised valuations

■ Taking the cycle out of the equation• The adaptive growth approach• Probabilistic approaches

■ Using probabilities to reduce forecasting limitations• Normalised earnings multiples

■ Back to mid cycle…..• Adaptive fundamentals• Real options for underdeveloped resources

■ The extraction/development decision and its value• Valuing a natural resource firm


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-commodity-companies-and-sectors/


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Course Content

Warranties, Indemnities, Guarantees, RepresentationsEntire Agreement Clauses & Distinctions

In-House:

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Course Overview

Location: London Standard Price: £*** +VAT Membership : £*** +VAT

This programme is focussed on lawyers and non-lawyers alike, any practitioner in business transactions, whether in commerce or finance, both from the UK and abroad.

Participants will look at distinctions between each, their different use and interpretations between jurisdictions. Where overlap and confusion may creep into transactions and expected outcome.

They are used in commercial, infrastructure, IT, construction, property, M & A, joint venture and other transactions. In addition they are symbiotic with due diligence in its many forms whether buying a business, share or asset purchase. They are routes to minimising the risk in a transaction.

Each type manages risk at different levels and the course will assist you in which to select to protect you or your clients’ interests.

Increasingly they have all become the subject of claims and therefore court cases. The course will look at key cases and the impact for lawyers and non-lawyers for negotiations, drafting and transactions.

The course will look at key cases as to the scope of a warranty, Betfairs v Sutherland, what is meant by ‘full and fair disclosure’ Levison, Daniel Reeds, New Hearts and Infiniteland v Artisan, , prior knowledge Eurocopy, warranties v representations and a damages Sycamore v Bidco.

During the course participants will look at case studies, sample clauses and receive checklists to assist them with dealing with joint ventures a following the course.

Introduction ■ Definitions ■ Contrast ■ Distinguishing warranties and indemnities ■ Does a guarantee vary the agreement ■ Recent cases ■ Letter of Comfort v Guarantee

Warranties ■ Allocating risk ■ Difference between a Warranty and an

Indemnity ■ Providing a warranty ■ Key pointers ■ Third parties ■ Security ■ Remedies for breach ■ Damages for breach of warranty

Indemnities ■ Definition – examples ■ 6 types of indemnity clauses

■ Indemnity or warranty ■ Indemnity or guarantee ■ Guarantors consent to alterations ■ “Hold Harmless” ■ Drafting indemnities ■ Your giving ■ Your receiving ■ Duration of liability ■ Key cases - Tullow v Heritage [2014] ■ Contra proferentum ■ Extending indemnities

Guarantees ■ Fundamental elements including Golden

Ocean v Salgaocar Mining [2012] ■ Pointers for drafting ■ Drafting pitfalls ■ Guarantor’s rights ■ Distinction between performance bonds

and guarantees ■ “All monies” guarantee ■ Anti – discharge provisions


http://redcliffetraining.com/training/mergers-and-acquisitions/warranties-indemnities-guarantees-representations-entire-agreement-clauses-distinctions/



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Course Content


Course Content

Warranties, Indemnities, Guarantees, RepresentationsEntire Agreement Clauses & Distinctions


■ Guarantee or Indemnity Associated Ports v Ferryways [2009]

Representations ■ Differences between Representations and

Warranties ■ Innocent misrepresentation ■ Negligent misrepresentation ■ Negligent misstatement ■ Fraudulent misrepresentation ■ Fraudulent misstatement (tort of deceit) ■ Misrepresentation Claims

‘Entire Agreement’ Clause ■ Key elements ■ Rectification ■ Court’s approach Surgicraft v Parardigm

[2010] ■ Practical considerations ■ Pointers for Sellers ■ Pointers for purchasers

Warranty Claims – Key Cases ■ Scope and nature of the warranty ■ Betfairs v Sutherland ■ Full and fair disclosure ■ Levison v Farin ■ Daniel reeds ■ Infinite land v Artisan ■ Sycamore Bidco v Breslin ■ Prior knowledge ■ Eurocopy ■ Pointers for buyers ■ Pointers for sellers

Clinic & Questions


http://redcliffetraining.com/training/mergers-and-acquisitions/warranties-indemnities-guarantees-representations-entire-agreement-clauses-distinctions/


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Course Content

Valuing Emerging Market Companies

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Course Overview

This programme has been designed to develop the participants’ understanding of the key issues facing Finance professionals valuing Emerging Market (EM) companies.

At the end of this programme, the participants will be able to:

■ Understand the key challenges arising from EM companies, namely currency volatility and coun-try risk premium;

■ Compute a Discounted Cash Flows (DCF) and trading multiples valuation of EM companies; ■ Analyse and choose appropriate currency in cash flow forecast and discount rate; ■ Decide on appropriate risk free rate, beta and country risk premium to be used in the discount

rate; ■ Perform a two-stage Terminal Value for high-growth EM companies; ■ Decide on sensible use of trading multiples in EM.

Case Study: The participants will use a variety of EM case studies and exercises during the training

Participants will be required to bring a laptop and a calculator to the course.

Introduction ■ How does EM differ from developed markets

• Family-owned business• Inflation and growth rate• Country risks• Commodity risks• Lack of transparency• Corporate governance• Access to data

■ Are local trading multiples available? ■ Should DCF be the main source of value? ■ Key valuation issues to consider

• Choice of currency in forecast and dis-count rate

• Discount rate and country risk premium• Two-stage Terminal Value for high growth

with use of fades• Valuation discount necessary?

Information Gap and Accounting Standards ■ Access to data/financial statements ■ IFRS reporting or local GAAP? ■ Inflation accounting use in hyperinflation

countries

Currency Issues ■ EM country currency systems

• Pegged vs. floating exchange rate ■ Nominal or real cash flows ■ Currency volatility

• Exchange rate• Own purchaing power (inflation)

■ Choice of currency in valuation• Currency consistency - same currency in

forecasts as per discount rate ■ Local EM currency vs. standard (i.e, US$)

• Standard currency and use of Forward rates for foreign exchange conversion

Case Study I: Participants compute the Free Cash Flows of Tata Motors

Discount Rate - Cost of Debt ■ Risk free rate

• Any public traded bonds outstanding?

• Local currency or US$• Use of default spread with synthetic rating

■ Sovereign default rating ■ Pitfall of double-couting or triple-counting

risks

Discount Rate - Cost of Equity ■ Beta

• Beta reliable and liquid?• Use of ADR or GDR betas?• Choice of well-diversified global index

■ Country risk premium methods • Sovereign default spread method• Relative equity market volatility method• Composite method

Case Study II: Participants calculate betas and cost of equity for Gerdau Steel

Two-stage Terminal Value ■ Entire value in Terminal Value highly sensitive

to perpetuity growth rate and WAC ■ Alternative terminal value approach: value

driver• Disaggregating return on invested capital -

profitability and efficiency ■ Building a two-stage terminal value model

using separate annuity and perpetuity rates

Case Study II: Participants compute a two-stage Terminal Value of EM corporate

Trading Multiples in EM ■ Size of sample: less than a handful real com-

parables? ■ Considering other EM regions ? ■ Using discount to developed markets trading

range

Overall Valuation Discounts ■ Significant risk from nationalization or expro-

priation ■ Subjective discount or scientific method? ■ Use of decision trees and probability weight-

ing

In-House:


https://redcliffetraining.com/training/corporate-finance-training-courses/valuing-emerging-market-companies/

The specialist in highly technical, market-driven banking and corporate finance training

web: redliffetraining.com email: [email protected] phone: +44 (0)20 7387 4484

The specialist in highly technical ... - Redcliffe Training

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