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LPC Law Notes Private Acquisitions Notes

Due Diligience Chart Notes

Updated Due Diligience Chart 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...

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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:

Due Diligence

Issue Risk Solution Further Information
Key Contracts Non-exclusivity

  • Competitors could use the same software or products

  • Contract/products not worth as much

  • Restricts scope of use

  • Price adjustment

  • Enter into exclusivity agreement

  • Deal breaker?

  • How do they intend to use the contract & IP rights?

  • How key to the deal is this contract?

  • Is an exclusivity deal a viable option?

  • Is there an alternative supplier that could be used?
Assignment Applicable for an asset purchase Need consent – condition precedent
Termination The contract can be terminated Warranty that there have been no breaches and that any debts are fully paid up Have there been any breaches or are there any potential breaches?
Change of Control Can terminate on written notice resulting in the loss of an important contract

  • Seek a waiver of change of control clause

  • Make SPA conditional on waiver

  • Enter into a new contract

  • Is there any other product that could be used?

  • Is termination likely?

  • Confidentiality
Confidentiality Breached already so could be sued or contract terminated

  • Sellers obtain permission to disclose details of contract, if the answer is no then re-evaluate purchase price

  • Or indemnity for breach

 Has there been any waiver of confidentiality?
Articles of Association Pre-emption Rights Other shareholders can prevent the Buyer from acquiring the entire share capital of the Target if they decide to exercise their pre-emption rights

  • Remover pre-emption rights on transfer from articles

  • Ask sellers to obtain a written waiver of pre-emption rights from the shareholders

 Have pre-emption rights been followed in the past – have there been valid transfers in the past?
ASC How much has been allotted? Has the cap been reached?

  • Ask seller to remove ASC from Articles by OR

  • Change Articles
Liens If a shareholder is indebted to the company, the company has a right to retain share and shareholder will be unable to sell the share

  • Get a warranty that there aren’t any liens

  • Get directors to declare liens exempt

  • Release documents condition on completion

 Investigate whether there are any liens
Director indemnities Company could be liable for the actions of the directors after a takeover Warranty that there has been no breach of articles More information about directors and whether this article has ever been activated
Employment Golden Parachute

  • Might have to pay money to key managers

  • They may be more likely to leave

  • Warranty that there are no more people affected other than those specified

  • Price adjustment

  • Earn-out on the deal

  • Details about clause – is it binding?

  • How much is it?

  • See contracts to analyse all key terms & conditions

  • Who is entitled to the golden parachutes?
Payments for loss of office Company could be liable if there is an indemnity clause in the articles

  • Retrospective ordinary resolution for payment of loss of office (215 CA 2006)

  • Warranty that properly authorised

  • Warranty about who has clauses

  • Maybe price adjustment if it runs into the millions of pounds

  • Was it properly authorised

  • Check board minutes

  • Check service contract
Dismissal Possible litigation (wrongful/unfair dismissal)

  • Warranty that correct steps were taken

  • Indemnity if there is a claim

  • Were the correct steps taken?

  • What did the employee do?

  • Employee’s contract
IP Litigation pending or patent thrown out

  • Deal breaker

  • Price adjustment

  • Patent documentation

  • Patent fees paid up
Litigation Huge costs if claim/clause breached

  • Warranties

  • Indemnity for costs of litigation

  • Sellers put money in an escrow account

  • Contract

  • Documentation breached

  • Letter before action, letter of claim, claim form – have proceedings been issued?
Property

  • Lose property shortly after takeover

  • Change of ownership restriction in lease

  • Not contracted out of LTA 54 so might cost more money – risk that might not be able to get vacant possession or remain in property

  • Get new lease

  • Landlord give 6 months’ notice...

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