Acquisition of Target Company

Information Gathering, Initial Analysis, Creating Term Sheet and Negotiating Key Elements of Transaction

Information Gathering About Target and Stakeholders’ Expectations

  • Gathering all available data and information about the Target (financial data, operating data, full list of shareholders, news, rumors, on and off the record conversations, etc.)
  • Depending on circumstances and appropriateness – communicating directly and indirectly to Target’s management, relevant people in the supervisory board, major creditors (banks) and other stakeholders involved in order to completely understand their view of an ideal transaction.
  • Identifying key factors for success of the bid based on expectations of the stakeholders.
  • Overview of the local regulatory environment influencing the acquisition.
  • Talking to the seller’s advisors (if any), procurement of information memorandum and / or vendor due diligence, and transaction process letter if such documents have been prepared.

Creating and Negotiating Term Sheet

  • Help in defining and negotiating initial transaction structure and basic transaction terms (term sheet) from commercial, tax and legal point of view, including but not limited to the following aspects:
    • Pure share deal or partially asset deal and treatment of associated businesses and companies
    • Exclusivity period for the buyer
    • Valuation and targeted net working capital at closing
    • Due diligence requirements
    • Payment mechanism (earn out and its variables, deferred payment portion of the purchase price depending on the seller’s and buyer’s expectations)
    • Treatment of non-core assets, intercompany and shareholder loans
    • Determination of the conditions precedent (CPs) that need to be fulfilled as prerequisite for closing
    • Drag-along and tag-along rights, including rights of first refusal and lock-up periods in case existing shareholders stay in the ownership structure
    • Conditions under which the buyer will provide additional financing in the form of equity (if further capital increases are needed)
    • Call and put options for any of the parties
    • Treatment of existing management
    • Representation and warranties of the seller
    • Non-compete clause
    • Escrow account and other aspects of the deal necessary to address particularities of envisaged transaction

Preparation and Conducting of Due Diligence and Final Valuation of the Target

Preparation for Due Diligence

  • Creating a list of financial, tax, legal, commercial, and technical documents, data and information about Target to be placed and made available in data room
  • Suggestions to seller as to how to set up data room
  • Depending on transaction type and actual need, GRUBISIC & Partners may engage third party support in case Target operates in more than one country

Conducting Due Diligence

  • Conducting of financial analysis.
  • Conducting of tax analysis.
  • Conducting of legal analysis.
  • Communication of important findings during the process of due diligence as "early warning" signals of issues to be dealt with.
  • Coordination of work of all parties involved from buyer’s side in due diligence process.
  • Preparation of final list of material risks identified within due diligence.
  • Developing proposals of solutions and ways of dealing with problematic items stemming from due diligence

Final Valuation of Target Company

  • Projection of income statement.
  • Projection of balance sheet.
  • Projection of cash flow.
  • Valuation
  • Defining earn out (if any) and/or deferred portion of the payment price.

Final Structuring, Valution, Preparation of Transaction Documents and Execution of Conditions Precedent

Final Structuring and Valuation

  • Final valuation and structuring
    • Recommendation of adequate treatment of problematic items found in due diligence
    • Recommendation of price adjustments (amounts and mechanics – if any)
    • Implied valuation by DCF
    • Defining conditions precedent for closing
    • Defining final transaction structure from financial, tax and legal point of view

Preparation of Transaction Documents and Negotiation of Final Terms

  • Drafting of Transaction Documents (TD)
    • Share Purchase Agreement (SPA)
    • Shareholder Agreement (SHA)
    • Share Transfer Agreement (STA)
    • Management Agreements (MA)
    • Escrow Agreement (EA)
    • Supply Agreement (SA) or other agreements regulating provision of goods and services between related parties
    • Documents for regulators
  • Financial, tax and legal support in negotiations of final terms within TD
    • Net working capital, contingent liabilities and other adjustments to the final price, payment mechanism
    • Representations and warranties, applicable law, non-compete clause, agreements with related companies, management agreements, etc
    • Escrow account, earn out, further financing, and other elements of the acquisition given the circumstances
    • Conditions precedent and closing proceedings

Signing, Pre-closing and Closing

  • Defining and organizing signing proceedings
  • During the period between signing and closing, assisting in fulfilling conditions precedent on buyer’s side and validation of fulfillment of conditions precedent by the Target firm and / or the seller(s)
  • Organizing closing proceedings