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LPC Law Notes Private Acquisitions Notes

Auction Sale V Private Sale Notes

Updated Auction Sale V Private Sale Notes

Private Acquisitions Notes

Private Acquisitions

Approximately 339 pages

A collection of the best Mergers and Acquisitions* notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short, these are what we believe to be the strongest set of Mergers and Acquisitions notes available in the UK this year. This collection is f...

The following is a more accessible plain text extract of the PDF sample above, taken from our Private Acquisitions Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Auction Sale p.33 Private Sale p.32
DEFINITION A controlled auction is the sale of a company or business where the seller seeks competing bids for the target. The issues that arise on this type of transaction are very similar to those that arise on most private sales. A buyer for assets or shares may be sought either directly by the seller or by an intermediary such as a financial adviser, bank or accountant.

The timing and order of the steps in the auction process differ from transaction to transaction, but they almost invariably include the following:

  1. Advertisement of Sale:

- By S.755(1) CA 2006 Private Co.’s cannot offer shares for sale to general public. BUT,

- By s.756(3) and advertisement issued to specifically identified B’s is the exception, BUT

- Note FSMA 2000

  1. The distribution of an information memorandum and letter detailing the auction process to prospective bidders.

- does not create a binding contract,

- inviting B’s to submit indicative offers,

- Co. is sold without finance

- Co is sold by “debt free/cash free “ price p.23

- Outlines Co.s information (eg. General assets, tax position, potential liabilities, strengths, weaknesses)

-Buyer will see warranties from S

  1. A first round of "indicative" bidding.

  2. A DD investigation and review of draft sale documents by bidders.

  3. A second round of bidding from a limited number of bidders, accompanied by their responses to the seller's draft documents.

  4. Negotiations with one or more bidders, leading to the conclusion of a sale.

B and S already know each other; they have agreed the main commercial terms of the proposed acquisition and possibly an agreed period of exclusive negotiations. The usual procedure for negotiating the contract

documents on a private sale is as follows:

  1. The buyer’s lawyer prepares the draft sale and purchase agreement. He submits this to his client and, with his client’s agreement, forwards it to the seller’s lawyer.

  2. The seller’s lawyer considers the draft sale and purchase agreement with his client and amends it, returning the amended draft to the buyer’s lawyer.

  3. The seller’s lawyer prepares a draft disclosure letter based on information provided by the seller which, after the seller has approved it, will be sent to the buyer’s lawyer.

  4. The buyer’s lawyer considers the draft disclosure letter with his client, and amends it appropriately, returning it to the seller’s lawyer.

  5. Both parties’ lawyers agree final versions of the sale and purchase agreement and the disclosure letter (there may have been many drafts before getting to this stage).


The seller seeks a number of benefits from the auction process:

  • The Seller drafts the SPA

  • The seller can usually reach more potential buyers through an auction.

  • The competitive tendering process is intended to maximise the price by encouraging potential buyers to bid against each other. In some cases, the seller will run a dual-track process with a view to eliciting a pre-emptive offer from a bidder before the second round of bidding has been completed.

  • As well as a higher price, the process should enable S to obtain better sale terms than might be achieved on a more typical private treaty sale. S prepares the first draft of the sale documents, and the competitive process is used to encourage bidders to make only those changes to the documents which they feel they absolutely need. S has the advantage of being able to continue negotiations with more than one bidder until the terms have been agreed, enabling it to defer committing to any one buyer until the principal terms have been settled.

  • The seller seeks to use the data room set up for the sale (seePreparation of the data room) to control the amount of documents disclosed and limit the investigation permitted to bidders.

  • The seller has the opportunity to control the timetable, in particular to reduce the time it takes to proceed from agreement in principle to completion of the sale (seebox, Specimen timetable).

  • A well-marketed auction can enable directors to demonstrate to shareholders and creditors that they have obtained the best price for the target.

  • The Buyer drafts the SPA

  • Continuity of trade

  • Confidentiality may be an advantage as documents are disclosed to a very limited number (usually 1 or 2) of potential buyers.

  • It is not as disruptive as auction sale in relation to employees.

  • Do not go through the potential embarrassment of having an auction and not having a buyer.

  • Smother process of negotiations as S is dealing with one B and not multiple parties as in an Auction Sale.

  • Auction sale may take...

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