IT’S TIME – Understanding Legal Structures & Governance

Watch the second part of our webinar series: IT’S TIME – Understanding Legal Structures & Governance with Nathan Daniels. Nathan is one of BC’s top M&A lawyers – helping guide business owners through these interesting times.


In this presentation, Nathan shared his experience working with business owners through a global pandemic and what you should be aware of prior to the sale of your business.


View the full webinar below:


Part 1: Maximizing your Business's Value

Part 3: Selling your Business with Confidence

Part 4: Minimizing your Tax Bill


Key Points by Nathan Daniels


Types of private company transactions:

1. Purchase transactions
  • Bolt-on acquisition

  • Transformative acquisition or merger transaction

2. Sale to third parties
  • Strategic buyer

  • Private Equity fund

3. Transition to family or sale to management

Key Steps In the Process:

1. Getting prepared
  • Making sure you really want to sell

  • Legal preparation for a sale

  • Legal preparation for a purchase

2. NDAs and preliminary due diligence investigation
3. Letter of Intent (LOI) and exclusivity
4. Confirmatory due diligence
5. Structuring
  • Tax impact on Vendor – LCGE

  • Tax impact on Purchaser

  • Responsibility for historical liabilities

  • How hard is it to assign contracts (if an asset sale)?

  • Alternatives:

  • Sale of shares

  • Sale of assets

  • Pre-closing reorganization/hybrid transaction

6. Purchase Agreement
7. Disclosure Schedules
8. Non-Competition Agreement
9. Bank financing
10. Employment Agreements for senior management
11. Employment offers for other employees (if an asset sale)
12. Closing = $$$
13. Integrating the two businesses
14. Corporate governance
  • Composition of the Board of Directors

  • Shareholders Agreement

15. Working capital adjustment
16. Indemnity claims


Key Challenges:

Disclosing information to:
  • Competitors

  • Customers

  • Suppliers

Employee Issues:
  • When to tell them

  • Double the workload during the deal

  • Retaining them

The “Price Grind”
  • When to expect it

  • How to respond?

Closing the value gap
  • Vendor take back (VTB) financing

  • Earn outs

Avoiding post-closing claims
  • Working capital adjustment disputes

  • Financial statement not “GAAP”

  • Condition of assets warranty

  • Compliance with laws warranty


The QUALITY of your advisors and the TIME you INVEST in preparing the disclosure schedules is KEY!


Guest

Nathan Daniels – Partner – M&A | Private Equity

Mogan Daniels Slager


Nathan has over 25 years of experience assisting clients on M&A and private equity transactions. He acts primarily for private equity funds, entrepreneurs, and management teams on transactions involving private companies. The Canadian Legal Lexpert Directory lists him as Repeatedly Recommended as a leading lawyer in the area of private equity. In addition to working on deals in Western Canada, Ontario and Quebec, Nathan also has significant international experience, advising on many Canada/US cross-border acquisitions and cross-border private equity transactions. He also worked for several years in the London, UK office of Freshfields Bruckhaus Deringer LLP, a leading international firm.


Anchor Pacific Investment Management Corp. (“Anchor Pacific”)  is a Vancouver, BC-based portfolio management firm, which leverages process, technology, and infrastructure to democratize the process of managing endowment and pension style investment portfolios to deliver innovative, high-touch, and transparent investment programs across the full spectrum of asset owners and investment consumers.


To learn more about how Anchor Pacific can help you shelter, protect, and grow your money, contact us at 604-336-9080 or info@anchorpacificgroup.com

Aligned Capital Partners Inc. (“ACPI”) is a full-service investment dealer and a member of the Canadian Investor Protection Fund (“CIPF”) and Investment Industry Regulatory Organization of Canada (“IIROC”). Investment services are provided through Anchor Pacific Investments, an approved trade name of ACPI. Only investment-related products and services are offered through ACPI/Anchor Pacific Investments and covered by the CIPF. Financial planning and insurance services are provided through Anchor Pacific Wealth Management. Anchor Pacific Wealth Management is an independent company separate and distinct from ACPI/ Anchor Pacific Investments.

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