Deal Closing Skills for Corporate Financiers

We begin after round 1 and prior to final offers: maximising interest and value

• Best practice tradecraft aimed at maximising the quality of final offers
• Running an efficient process: recap on buyer discussions to date and indicative offers, review information provided, nature of buyer Q&A and extent of diligence remaining – how to assess true interest
• Assessing the position of each buyer – financing and synergies – worked examples/ case studies to assess how fully they are bidding
• Deploying ‘Why pay more’ arguments (with case study) in order to maximise the value of final offers
• Post-Covid uncertainty: bridging a value gap
• Why it’s important to lead – early – on the equity bridge

Project management: Key soft skills at this stage of the process

• Build relationships across the deal – and carry the value of those in final negotiations
• The principles of good communication
• Anticipation: understanding the strategy and motivation of each buyer
• Tactics to deploy, should you fear that buyer interest may be waning
• Keep on top of value drivers
• The importance of incentivising operational managers

Preferred bidder/ Negotiating heads of agreement: reducing risk to seller

• Maximising competitive tension
• Criteria for choosing a preferred bidder
• Why the financial adviser should lead on Heads
• Key financial points to negotiate and lock in – with case study
• What points can be agreed in Heads/ what (probably) has to remain open
• Exclusivity – what does this change?
• Ways to reduce the risk of price chipping

Confirmatory’ due diligence and how this may affect price

• Financial adviser’s role in staying abreast of buyer’s diligence
• Pulling in due diligence findings which should go to price - examples
• Advise client on potential issues and how to deal with them
• When is it timely to ‘close off’ diligence? Techniques for forcing this

Principles of finalising the purchase price – prior to Heads and beyond – why some financial points inevitably remain open until late on

• Leading on presentation of the equity bridge
• Cash and debt – what are the likely/ key debating points
• Understanding ‘permitted leakage’ – what leakage goes to price (and what does not) – with case study
• Exercise on cash/ debt adjustments
• Why we need a working capital target and adjustment mechanism
• Difficult to agree: Setting the working capital target, with case study
• How to identify manipulation in working capital
• Exercise on working capital adjustments

Techniques for finalising the price

• The importance of ensuring a clear link between the agreed pricing and the terms of the SPA
• Completion accounts/ locked box workings – overview and comparison of key steps, key variables
• Case study – completion accounts process
• What can go wrong in finalising completion accounts
• Case study – tracking the ticker in a locked box structure
• Why is a locked box not always suitable?

What’s different about asset purchases from an M&A perspective?

• Getting the asset definition right
• Apportioning value – potential issues (e.g. tax)
• Potential issues around stock valuation
• Sensitivities around asset transfer, IT, employees, other stakeholders

Legal Overview - key commercial points in the SPA – what the financial adviser needs to appreciate and support

• Financial terms and transaction structure: the financial adviser’s input
• Interaction with the disclosure exercise, and how this may go to financial (and other) terms
• Where an indemnity may be appropriate – Case study
• Where escrows and holdbacks may affect a deal – case studies of what is reasonable
• The potential value of warranty insurance (to both parties) in heading off commercial concerns – case study
• Overview of how can an SPA be ‘buyer friendly’ or ‘seller-friendly’

Cash movement at completion – the financial adviser’s role in drawing up a funds flow

• Case study based on an actual transaction to draw out key components
• Treatment of expense deductions
• The importance of giving clear instruction to the buyer, their funders and the lawyers

Recap on tradecraft/ Concluding messages

Redcliffe’s Deal Closing Skills for Corporate Financiers course is delivered by an expert with real-world experience. He has worked on corporate finance deals and capital markets transactions for over thirty years, holding positions on the client side as well as leading advisory teams.

At the Department of Energy, he was a civil servant involved in the privatisation of British Gas, a global IPO involving a large advisory team. From 1990-1992, he spent two years in the Hungarian Government privatisation agency working with many advisory firms, as the changing political environment triggered massive ownership change. He has worked in major investment banks (Swiss Bank Corporation International, now UBS, and Lazard) and also co-founded a successful M&A advisory boutique firm. In 2021, he retired from KPMG, where he spent 13 years in the firm’s global M&A business, based in Scotland.

His experience combines a broad range of M&A and equity transactions in North and Central America, Asia Pacific, all the major European countries, and, more recently, in Africa. His courses draw deeply on case studies from transactions he has run, bringing practical examples to set alongside the theory, which includes this deal-closing skills course.

Our deal closing skills training will cover the following:

• Practitioners with less experience will accelerate their learning around the latter stages of the M&A process with discussions of tradecraft, case studies and, best practices
• Focus on a range of detailed techniques, highlighting key value points and other commercial terms which are often only addressed in the final negotiation, making clear where wins and losses may ensue.
• Quickly appreciate why this is not ‘something which can be left to the lawyers’
• Address the issues that require detailed engagement from M&A practitioners right through to the point at which cash moves. We explore how they should remain engaged to ensure they achieve the best deal possible for their client

This deal closing skills training course is a ‘must know’ for:

• All professionals closely involved in the detailed work leading up to the completion of M&A transactions
• M&A professionals at all levels, but especially those running transactions day-to-day
• Corporate, in-house M&A team members
• Private equity professionals who manage or oversee the execution of their firm’s deals

This deal closing skills course is a ‘nice to know’ for:

• Legal and other advisers involved in the M&A process that are seeking a better understanding of how transaction processes are run and the financial focus as deals approach completion
• Legal advisers seeking a better understanding of the financial principles behind the equity bridge, completion accounts and the locked box approach

M&A transaction fees are famously back-ended, with 90% (sometimes 100%) contingent on successful completion. Add to this the fact that M&A processes are rarely straightforward, and represent a big and (often) one-time decision for one or both parties: both the buyer and seller.

Therefore, closing deals is not straightforward. Yet financial advisory houses still consider origination as the holy grail, with business winners treated as rainmakers, and those tasked with delivery seen as water carriers. This deal-closing skills for corporate financiers course aims to give full exposure to the skills and tradecraft needed to become a master practitioner who consistently closes deals.

Starting in the middle of a typical sale process, with established interest but ahead of final offers, the course covers every skill and negotiating point relevant to ‘bringing the deal home’. It addresses how to drive business value and negotiate the fine details of equity value, including completion accounts and locked box pricing.

Redcliffe’s deal closing skills training course focuses on all the necessary soft skills that maximise buyer interest, and carry all parties to the transaction process forward, bringing due diligence to a head. There is a specific focus on how to choose a preferred bidder and lock in key terms via Heads of Agreement.

Lastly, there is a section to help understand the areas of the SPA that can cause commercial disputes (or be used to solve differences), and how financial advisers can best interact with the lawyers as the SPA is finalised.

Above all, completing this course gives you greater control over the latter part of any sale process you are managing, making you better at closing the deal.