Deal Closing Skills for Corporate Financiers

We Begin After Round 1 and Before 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 alongside 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 for full bidding assessment

• Deploying ‘why pay more’ arguments (with case study) to maximise final offer values

• Post-Covid uncertainty: bridging a value gap

• The importance of leading – early – on the equity bridge

Project Management: Key Soft Skills at This Stage of the Process

• Build relationships across the deal: carry the value of those in final negotiations

• Good communication principles

• Anticipation: understanding the strategy and motivation of each buyer

• Tactics to deploy upon buyer interests waning

• Keeping 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 should be agreed in Heads of Terms - what (probably) has to remain open?

• Exclusivity – what does this change?

• Price chipping reduction methods

Confirmatory Due Diligence: 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 Before Heads and Beyond: Why Some Financial Points Inevitably Remain Open Until Late on

• Leading on presentation of the equity bridge

• Cash and debt – the key debating points

• Understanding ‘permitted leakage’ – what leakage does and does not go to price (including case study)

• Exercise: cash/ debt adjustments

• Why we need a working capital target and adjustment mechanism

• Setting the working capital target: why it is difficult to agree (with case study)

• How to identify manipulation in working capital

• Exercise on working capital adjustments

Price Finalising Techniques

• 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 when finalising completion accounts

• Case study – tracking the ticker in a locked box structure

• Why isn't a locked box 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: 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 an SPA can 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 instructions to the buyer, their funders and the lawyers

Tradecraft Recap and Concluding Messages

Training Objectives

• Less experienced practitioners will accelerate their knowledge around the latter stages of the M&A process using discussions of tradecraft, case studies and best practices

• Training focuses on a range of detailed techniques, highlighting key value points and commercial terms, often only addressed during the final negotiation - making clear where wins and losses may ensue

• Appreciate quickly why this cannot ‘be left to lawyers’

• Address issues requiring detailed engagement from M&A practitioners right through to when cash moves. Sessions explore remaining engaged to ensure the clients receive the best deal possible

Training Course Summary

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

Therefore, closing deals is not straightforward. Financial advisory houses, however, still consider origination the holy grail, with business winners treated as rainmakers, and those tasked with delivery as water carriers. Deal-closing skills for corporate financiers provide full exposure to the skills and tradecraft required to become a master practitioner with deal-closing consistency.

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

Participants focus on all necessary soft skills that maximise buyer interest, carrying all parties to the transaction process forward and bringing due diligence to a head. Training focuses specifically on choosing a preferred bidder and locking in key terms via Heads of Agreement.

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

This course gives participants greater control over the latter part of any sale process, ensuring enhanced skills at closing.