corporate m&a

acquiring insolvent businesses

Although buying an insolvent business at a knock-down price can be a very shrewd and cost-effective way of acquiring assets or building market share, there is usually a much greater risk for the buyer when compared to a transaction involving a solvent seller. The insolvency practitioner will only be prepared to sell the assets “as seen”, without the benefit of any warranties as to condition of the assets, recoverability of book debts or even as to the ownership of the assets. You’ll need lawyers who can advise you what to look out for, what due diligence needs to be done, what constitutes market practice and (perhaps more importantly) what does not.

Time is very often of the essence in this type of transaction. Administrators are usually keen to sell on the business as quickly as possible in order to preserve as much value as possible. We can respond quickly and give you the best chance of completing the deal.

We can advise on the following:

• asset purchase agreements where the seller is an insolvent company;
• due diligence – what you need to focus on and what you may have to take a view on;
• directors’ personal liability – what happens if any directors of the buyer are also directors of the insolvent company? What happens if the buyer intends to use the name of the insolvent company?;
• responding to enquiries from Administrators;
• hive-downs to achieve a sale by share purchase and utilise trading losses;
• the validity of transactions; and 
• retention of title claims.
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buy-outs & buy-ins

MBOs and MBIs have enjoyed a long and successful tradition in the UK since they first came to prominence in the 1980s.  Lawyers at White & Black have advised on many of the leading MBOs and MBIs during this time such as the buy-outs of Vectair Systems Group (backed by Matrix private equity) Terinex, Autosigns and Turners of Soham.

The White & Black team brings a formidable level of expertise and experience in MBOs and MBIs with over 50 years combined experience in these types of transactions.  We have both the specialist knowledge to negotiate the minutiae of these deals and also, when required, the empathy and understanding to take a helicopter view of the commercial dynamics of a deal.  We appreciate the complex nature of the inter-relations between departing owners (who often roll-over part of their sale proceeds) incoming management and financiers including equity, mezzanine and senior debt providers.

We advise on both the corporate and banking elements of deals and can handle the most complex of transactions, including cross-border deals.  We have strong relationships with other specialist lawyers across the globe and frequently advise in tandem with these firms.

We act for management teams, finance providers, trade investors, selling shareholders and target companies alike, thereby ensuring that our advice is always informed by an appreciation of the other parties’ perspective.

White & Black advises on all aspects of MBOs and MBIs, including:

• heads of terms, confidentiality agreements and exclusivity arrangements;
• sale and purchase agreements, tax indemnities and ancillary documentation;
• legal due diligence, warranty and disclosure exercises;
• corporate governance issues;
• Investment agreements, investor rights agreements and subscription agreements;
• Inter-creditor agreements, ranking and priority deeds, facility agreements, security documents and other banking arrangements;and
• public to private deals;
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demergers & spinoffs

A demerger may take a variety of forms. In its most obvious incarnation, the shareholders in the demerged legal entities are identical to the shareholders in the original company and may well hold their shares in identical proportions to those before the demerger. In other cases, known as “a partition” a division or trade of a company will be transferred to another company whose shares are issued to shareholders of a particular class.  The remaining business or other trade is then transferred to another company whose shares are issued to the remaining shareholders.

These schemes often involve a group re-organisation, a formal Companies Act scheme of arrangement, a reduction of share capital, the payment of a dividend in specie and an offering of new shares.

At White & Black we can advise on a variety of different structures for a demerger or spin-off including:

• a three cornered demerger;
• a section 110 liquidation scheme;
• a part 26 Companies Act 2006 scheme; and
• a direct dividend structure.
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leveraged buy-outs

Leveraged buy-outs involve the purchase of a company (or its trade), usually by a newly formed company which is financed to a large extent by debt finance which is usually secured on the assets of the target company.

These types of transaction call on a range of corporate legal skills, all of which we possess at White & Black.  Our team can advise on the underlying acquisition, the banking aspects of the debt finance and on the law of private equity in relation to any equity finance.  We are able to negotiate complex inter-creditor arrangements, facility agreements, security documents and acquisition documents.  We can advise both private and public limited companies (where, in the case of the latter, the financial assistance restrictions continue to apply) and their funders as well as management teams, buyers and sellers in relation to the underlying buy-out.

At White & Black we can assist with all aspects of leveraged buy-outs including:

• data-rooms;
• auctions;
• FSA issues;
• financial assistance regulation (public companies);
• term sheets;
• due diligence;
• equity terms and structure;
• debt finance terms and inter-creditor arrangements;
• security arrangements; and
• corporate governance issues.
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