Advanced Negotiation Issues in M&A - ASPAC

The negotiation in mergers and acquisitions course trainer is a consultant, public speaker and author with expertise in private equity, debt advisory, restructuring and infrastructure. He is a Senior Advisor to KPMG Finland, a Senior Advisor to Reorg EMEA Covenants, the leading provider of information to the European High Yield community, and a Senior Consultant to Grant Thornton UK.

Training programmes are provided to a wide range of blue-chip clients in Europe, Africa, the Middle and Far East, North America and Australasia. In-house clients include banks (BNP Paribas, Société Générale, ING, Barclays Capital, Bank of China, RBS, SEB); lawyers (Baker & McKenzie, Skadden Arps, Sullivan & Cromwell, Cadwalader, Latham & Watkins, Weil, White & Case); advisory firms (Lazard, PWC, M&A International, KPMG, EY, Deloitte); PE firms (Cinven, Advent, Barings Asia, Waterland); corporates (Siemens, Airbus, Turkcell, Candy Crush, Gunvor, Statkraft) and governmental bodies (the UKLA, the EBRD, the ECGD, Omani Oil Corp.)

He qualified in South Africa both as a Chartered Accountant, with Deloitte, and as a lawyer with Hofmeyr where he was involved in structuring a number of high-profile project financings including BMW 3 Series, Ford Sierra, GM, Sappi and Mondi.

When he moved to London and joined Lazard Brothers as a corporate finance executive he was involved in a wide range of public and private transactions. Subsequently he joined Hoare Govett as an assistant director where he acted as an advisor to smaller listed companies and was involved in several syndicated Euro-Equity Initial Public Offerings.

In 1991 he joined ABN Amro’s cross border M&A team prior to being transferred to MeesPierson Corporate Finance as a Director in Cross-Border M&A where he was also involved in a number of deals in Central Europe. During this time he was a member of the EU-PHARE programme and advised the Estonian government on their privatisation programme.

He is the Programme Director at the City Business School, London, for Infrastructure Finance for the M. Sc. programme in Business Administration and Finance.

He is a member of the Institute of Chartered Accountants in England & Wales and the South African Institute of Chartered Accountants. He completed a BA and an LLB at the University of Natal and a B. Compt. (Hons) at UNISA.

• Effective negotiating strategies – the programme provides guidance on how to identify and classify the key issues for sellers and buyers to ensure the parties retain focus on why they are doing the deal and that the final transaction meets the original objectives
• Effective negotiating strategies and tactics –There is no one strategy that works in M&A but rather a range of strategies and tactics that are driven by the respective parties’ objectives. The appropriate strategy or tactic will depend on the importance of the issue being negotiated hence it is important to prioritise the various issues that will arise during the deal and apply the appropriate strategy to that issue
• The politics of the deal (Managing the various players) – a simplistic view of M&A is that it’s a case of buyer vs seller but the reality is more complex as the parties need to manage a wide range of actors (buyer, seller, lawyers, accountants and corporate finance). The programme provides guidance on these issues and strategies on managing the main parties and also their advisors. Unsophisticated sellers (& their advisors) pose particular challenges as do unreasonable players & the programme provides guidance on how to navigate these challenges
• Managing ‘management’ conflicts – managers with no equity stake can sabotage or highjack the sale process. The programme identifies these risks and provides strategies on risk mitigation
• Differentiating the buyer’s offer – in a competitive situation, buyers need to find an edge to get to pole position and close the deal. The programme discusses various strategies on how to achieve this
• The Equity Bridge (reconciling Enterprise to Equity Value) – the ‘Cash free / Debt free‘ concept seems simple enough but the devil is in the detail. Inexperienced parties can gain (or lose) value by failing to understand the nuances in the components of debt (& cash)
• The Working Capital delta – negotiating the working capital ‘Peg/Target’ is another aspect where the parties can surrender (or gain) material value. Buyers face an additional challenge post-closing of they have failed to acquire the target with an appropriate level of working capital. The programme reviews some of the common pitfalls in using ‘average’ or ‘normalised’ working capital and how to mitigate typical risks
• Completion Accounts or Locked Box – each mechanisms has its pros and cons. The programme covers the key areas of negotiation and the aspects which can trip up buyers & sellers
• Value erosion mitigation – sellers have a variety of ways of limiting value erosion under warranty (& indemnity) claims post-closing. The programme reviews the various methods and highlights the key traps for unwary buyers
• Warranty insurance – this has developed as an increasingly viable method of mitigating seller’s liability in many jurisdictions and is gaining traction globally. The programme reviews when, where and how to use this to best effect
• Bridging the Value Gap - often the key issue in getting the deal through. The programme reviews the various methods of closing this gap, the pros and cons of each of the primary ways of achieving this together with some additional methods of reconciling the parties
• Devising effective, bulletproof Earn-outs – often one of the most challenging aspect to negotiate but also a source of dispute post-closing. The programme provides guidance on the key issues, from the seller and buyer’s perspective, and how to mitigate the risks of dispute post-closing
• ESG as a negotiating tool? – ESG has become increasingly important to Private Equity & Listed companies since their investors. For unlisted corporates, ESG principles now assume greater impact on their financing options since banks are increasingly reluctant (or even unable in some jurisdictions) to lend to firms unless they can demonstrate compliance with ESG and a strategy to reduce emissions

• The trainer has over 40 years’ experience in M&A covering private and public deals
• His experience of M&A covers a wide range of regions including the UK, Europe, the US, Asia and Africa
• The trainer is still active in the M&A market through his various consultancies so is conversant of the current trends in the M&A market
• He has been involved in over 20 earn-outs
• Through presenting to clients involved in different aspects of M&A (advisers, Transaction services/DD, Investment Banks and lawyers) he gains exposure to different aspects to the M&A process

This negotiation in mergers and acquisitions training 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 advisors 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.