Private Acquisitions Elective
Statement of Outcomes:
On completion of the course successful students will be able, under appropriate
supervision, to:
1. demonstrate their knowledge and understanding and employ the applicable
skills in the elective area of law and practice :
2. use the legal knowledge, skills, procedures and behaviours appropriate to
each client and each transaction or matter;
3. identify the overall nature of the transaction, then plan and progress that
transaction or matter through a series of steps and decisions including, where
appropriate, drafting documentation;
4. identify the client’s goals and alternative means of achieving those goals and
deal appropriately with client care;
5. investigate and identify the relevant facts, research and identify the relevant
legal issues, and advise the client on the legal consequences;
6. recognise and act within the rules of professional conduct;
7. identify the client’s reasonable expectations as to quality and timeliness of
service.
8. reflect on their learning and identify learning needs.
These outcomes will be embedded into the subject, primarily through the design
of the sessions and work of preparation and activities during sessions. Our tasks
set will be transactional in nature and will require students (either alone or as part
of as team) to identify the client’s goals, needs and demands, the alternatives
open to the client and any constraints under which they operate. The
identification of the matter or transaction, as appropriate, will form part of the
student’s pattern of work and they will undertake for themselves the basic or key
steps required to advance matters- sometimes as work of preparation and on
other occasions during tutor – controlled sessions. In so doing, understanding
and skills will be demonstrated at each stage of the course prior to summative
assessment. Our students are required to take responsibility for their researches
and will frequently be called upon to offer practical advice (orally or in writing).
Links with practitioners and local firms will enable us to maintain the currency and
realism of tasks set and will assist us and students to ensure that students
appreciate the importance of being adaptive and responsive to the needs and
perspectives of clients in the SW and of delivering a high quality of service. The
design of our sessions will also take into account the need for students to be able
to recognise those occasions when their level of understanding is inadequate,
and thus when there is need to seek guidance from a principal. In so doing,
students will reflect on their individual stage of learning.
By the end of the course successful students will be able, under appropriate
supervision, to demonstrate their knowledge, understanding and skills in the
following specific elements:
The course will focus on the following two transactions:
1.
Business Sale - The scenario involves a corporate seller selling a
newsagent business by way of a going concern. Company background
for both buyer and seller, trading account / profit and loss and
balance sheet for target, employee
lists, supply contracts, official
copy and plan etc will be used to create the type
of detailed
scenario that students would likely encounter in practice.
Documentation will be used that reflects the type of documentation that
would likely be encountered in such a transaction including:
a. Heads of Terms.
b. Confidentiality agreements.
c. Business Sale agreement.
d. Due diligence information request.
e. Disclosure documentation.
f. Transfer documentation e.g. TR1 for freehold, deed of assignment
of goodwill, assignment of intellectual property rights.
2.
Share Sale – The scenario involves individual shareholders selling
shareholding to a corporate buyer. In this case the target is a printing
company. Company background for both corporate buyer and the
company of the individual seller shareholders is made available plus
accounts for target, employee lists, official copy and plan of freehold
property etc in order, as with the Business sale, to create the type of
detailed scenario that students would likely encounter in practice.
Documentation will be used that reflects the type of documentation that
would likely be encountered in such a transaction such as:
a. Heads of Terms.
b. Confidentiality agreements.
c. Share Sale agreement.
d. Due diligence information request.
e. Disclosure documentation.
f. Completion documentation.
The course will be run through a mix of podcasts and workshop sessions.
Workshops will involve face-to-face tuition and group working and will be designed
for small groups.
The relevant elements of the Legal Practice Course Outcomes and Vocational
Elective statement of outcomes would be provided by way of a combination of
podcast and workshops covering the content detailed in the subject outline below.
This gives an overview of the matters to be covered in each podcast and workshop
with linkage to elements of law and practice which are also shown below.
The podcasts are intended to provide students with a background explanation of
core aspects of the law and procedure and will enable students to repeat play if
required which will enhance the learning experience.
The workshops will, in the main, focus on the two private acquisition scenarios
outlined above. There will be consideration of how clients fund acquisitions and the
different options available (business sale vs share sale), how targets are valued and
how risk is apportioned by appropriate use of warranties, indemnities, disclosure
documents etc.
Aside from workshops and podcasts that give overviews of these types of
transactions the transactional nature of the course and the extensive package of
relevant documents will ensure that students will, by the end of the course, be able
to identify the overall nature of a private acquisition transaction and to be able to
progress such transaction through a series of steps, performing the tasks required to
advance such transactions with particularly strong emphasis on the drafting /
amendment of documentation.
The skills of writing and the skill of Practical Legal Research (e.g. researching nature
and purpose of warranties and requirements for effective disclosure) will also be
encountered at various points in the course. Students will also be required to write
letters of advice and presentation skills will also feature.
The course will require quite extensive use of IT e.g. LGS 4 tax learning exercise,
Much investigative research and drafting of documentation will require the use of
electronic library software. The internet will be used to gain access to regulatory and
other sources where appropriate; for example Competition ommission, Takeover
Panel (re overview City Code takeovers) etc.
The elective is primarily linked to some aspects of Business Law and Practice core
subject requiring a knowledge of matters linked to corporate law such as director and
shareholder matters, company constitution etc. There is also some fairly extensive
linkage to the tax planning with a requirement for basic knowledge of tax, particularly
capital gains tax, VAT, SDLT and corporation tax. Additionally there is linkage to
PLP with basic knowledge requirement of freehold transaction with some focus on
leasehold matters too, mainly in the context of business sale, but also linked to due
diligence in general.
The course will provide students with a sound understanding of the legal, practical
and commercial principles of a private share sale and a business sale. Students will
be required to consider share sales and business sales from the point of view of both
seller and buyer.
Additionally the course will provide students with a concise overview of how the city
works (primarily focussing on raising equity and “City Code” takeovers). The course
will enable students to apply substantive law to practical situations.
Students will not be expected to become experts, but should achieve sufficient
understanding to be able to fulfil, and benefit from, their role as a trainee solicitor in
a team working in this field.
ELEMENTS
1) Raising capital
Students will:
a) be able to distinguish between equity and debt finance,
b) give an account of the advantages and disadvantages of raising capital by
way of equity and debt finance.
c) advise on the principal methods of raising private equity.
2) Overview of share sale and business sale
Students will:
a) be able to give an overview of the structure of both a share sale and a
business sale.
b) be able to compare and contrast the share sale and business sale.
c) be able to explain to a client the main advantages and disadvantages of a
share sale and a business sale.
3) Tax considerations
Students will be able to:
a) Provide an overview of the taxation implications of a share sale and a
business sale from the perspective of both buyer and seller.
b) Explain the difference in taxation implications for a corporate / individual buyer
and seller.
4) Payment, pre-contractual documentation and due diligence
Students will be able to:
a) Define due diligence and explain the importance of due diligence in a share
sale and business sale.
b) Analyse financial information in order to value a business in a business sale
and shares in a share sale.
c) Explain, in the context of a share sale, the advantages and disadvantages of
different types of consideration.
d) Explain the purpose and basic form of pre-contractual documentation.
5) Agreements and sellers options to restrict liability
Students will be able to:
a) Demonstrate an understanding of share sale and business sale agreements
by explaining the content and purpose of these agreements.
b) Demonstrate an understanding of the methods by which a seller seeks to
restrict liability and in particular, to explain the content and purpose of
disclosure document.
6) Warranties and indemnities
Students will be able to:
a) Explain the purpose of warranties and indemnities.
b) Define and explain potential remedies available to an aggrieved buyer.
7) Exchange to completion
Students will be able to:
outline and explain the principal procedural steps to be taken between
exchange and completion, for both a share sale and business sale, and to
explain the significance of these steps.
8) MBO and City Code takeovers
Students will be able to:
a) Identify and explain the main differences between a general share sale and a
management buy-out.
b) Give a basic overview of group structures and tax considerations.
c) Give an overview of the City Code and impact on takeovers.
9) Topical knowledge and application
Students will be able to:
a) apply their knowledge of acquisitions law to make basic comment on major
current transactions as reported in the press and publicly available
documents.
10) Skills and Professional Conduct.
Students will:
a) have developed their Legal Practice Course skills;
b) be able to recognise when and in what ways rules of professional conduct
impact on their practice;
c) have reflected on their learning;
d) have practised their use of primary source and practitioner materials.
PRIVATE ACQUISITIONS ELECTIVE COURSE OUTLINE 2009/2010
Podcasts
(each of 1 hour)
1 Overview and Finance
Workshop Sessions
(each of 1.5 hours)
Introduction to methods of raising capital
and exit strategies for investors.
Structure of typical share sale and
business sale with focus on advantages
and disadvantages.
(Elements 1 and 2)
2: Prelim considerations
Introduction to pre-contractual
commercial issues and documentation
and an overview of content of share sale
and business sale agreements.
(Elements 2 and 4 and 5)
3: Payment and price
What is being bought and sold in share
sale and business sale, methods of
valuation and types of consideration.
(Elements 1 and 4)
Regulated activities and financial
promotion.
(Element 10)
4: Taxation (1 hour + e-learning ex)
Taxation considerations from the
perspective of both buyers and sellers in
a share sale and business sale
(Element 3)
5: Due diligence & investigation (1.5
hours)
Due diligence in a share sale and
business sale including the purpose and
process of due diligence and the role of
advisors.
(Element 4)
1: Comparisons between share sales
and asset sales (1): overview (2
hours)
Outline of share and business sale
transactions and contrasting of core
requirements and documentation for
both (Elements 2, 4, 5 and 7)
2: Comparisons between share sales
and business sales (2): Payment and
taxation
Overview of different payment
structures and their taxation
implications for specific share and
business sale transactions from the
perspective of both the buyer and the
seller
(Elements 2, 3, 4 and 10)
3: Preliminary documentation
6: Warranties and indemnities
(Element 6 and 5)
Review of the need for and basic
contents of pre contractual
documentation. Document analysis
and commercial awareness
(Elements 4 and 10)
7: Remedies
4: Due diligence & investigation of
target
Purpose and effect of warranties and
indemnities and links to disclosure
Buyer’s remedies and seller’s options for
limiting liability
(Elements 6 and 5)
Consideration of pre-contract
enquiries and the value of due
diligence.
(Elements 4 and 10)
8: Completion process
5: The sale and purchase agreement
(1): key clauses
Exchange and completion matters for
share sales and
business sales.
(Element 7)
Consideration of key clauses of
precedent share sale agreement
(Elements 5 and 10)
6: The sale and purchase agreement
(2): warranties
Consideration and negotiation of
warranties, indemnities and vendor
protection provisions
(Elements 6 and 10)
9: Business sales (1 hr)
7: Remedies, vendor protection and
disclosure
Main differences between share sale
process and business sale process esp.
TUPE & transfer of key contracts.
(Elements 2, 5)
Consideration of the purpose and
effect of disclosure
(note link to remedies in WS 9)
(Elements 5, 6 and 10)
8: Completion
Consideration of the completion
process and resolution of problems
(Element 7)
10: Groups
9: Post completion breaches
Overview of group structures, reorganisations and basic tax
considerations
(Element 8)
Self assessed questions
Consideration of remedies for
breaches of agreement discovered
post completion and effect of entire
agreement clause
(Element 6, 5 and 10)
11: MBOs
10: Business sales(1) (2 hours)
Management Buyouts
(Element 8)
Consideration of key clauses in an
asset sale agreement (and
comparisons with share sale
agreement)
(Elements 2, 3, 4, 5 and 6)
12: Overview of the “City”
11: Business sales (2) (2 hours)
Overview of how the City Works,
introduction to City Code Takeovers.
(Elements 1, 8, 9 and 10)
Detailed consideration of specific
aspects of a business sale agreement
by ref to case study 2 in particular
(Elements 2, 3, 4 ,5 and 10)
12: MBOs and venture capital
Consideration of legal, financial and
practical issues arising from an MBO
(to consolidate existing knowledge of
share and asset sales and compare
with variations required for an MBO)
(Element 1, 6 and 8)
Total 12.5 hours Podcasts
Total 18 hours Workshops