Thought for anyone not familiar it might be useful to walk through what a typical private company acquisition might look like. There's essentially 5 separate stages, Preliminary discussions, due diligence, documentation, exchange and completion.
Preliminary stages
Buyer and sellers negotiate and sign up heads of terms, confidentiality and exclusivity agreements.
Due diligence
Buyer carries out its due diligence information gathering and analysis. Information obtained feeds into the drafting of the deal documents and negotiations generally.
Documentation
Buyer and sellers negotiate the sale and purchase agreement and other documents. The heads of terms and information gathered during due diligence feed into the terms of the documents.
At this stage the sellers usually provide a disclosure letter which outlines anything that may materially affect the buyer and has not been dealt with in DD - this may lead to further negotiations - it is meant to protect the buyer as much as the seller from future claims.
Exchange
The sale and purchase agreement and disclosure letter are finalised and signed - known as exchange of contracts.
The parties are now committed to completing the sale and purchase in accordance with its terms which in the case of Everton would be subject to shareholder acceptance and the approval of the Premier League.
Shareholder approval would usually be formally dealt with at an EGM, however it is possible for the buyer to bypass this stage if either the buyer acquired or had agreement to acquire more than 90% of the shares. At this point there are insufficient shareholders dissenting to call an EGM, plus under UK company law the buyer now has the right to acquire the final shares having passed 90%.
In addition to the above there are a range of other practical issues to be arranged for example, payment of the purchase price; release of charges connected with the sellers’ funding arrangements and implementation of any buyer’s funding; resignations and appointments of directors and auditors.
Completion
At completion, ownership of the company or business being acquired is transferred to the buyer. Completion usually involves a formal completion meeting attended by the buyer, sellers, their lawyers and other advisers. It can often be a lengthy meeting as the lawyers check that all the formalities are in place, the purchase monies are available and all the ancillary documents needed to finalise the sale and purchase are ready for signature. It is not unusual for negotiations between the buyer and sellers to be ongoing at the start of this meeting.
