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A merger or acquisition can add considerable value to a business; however, making sure that each stage of the transaction process—from valuation to negotiation and completion—is successful demands considerable experience and knowledge.
We provide bid support services that help companies to make and defend hostile public bids.
If you are a bidder, we prepare hostile reviews on your own business and analysis of the vulnerability of the target.
For defenders, we work from the moment a hostile bid is announced to help defend or achieve the best price for your company. Our experience in defence situations enables us to help company management position themselves favourably to the markets during the bid.
We also carry out 'dummy' defence assignments for clients who feel exposed before a bid is announced. Many companies commission defence reviews as a routine board activity to help maintain an objective external view of their company.
You are looking to acquire a public target in the coming months;
You think that your company may be vulnerable - because of underperforming share indices, market criticism or the possibility that the company may be broken up;
Your company is announcing a restructuring, a change of strategy or an ambitious acquisition; and
Your company has problems with management succession.
Your organisation benefits from our early involvement, our familiarity with the process and priorities, and our understanding of how to work with the wider defence or attack team; and
We assist in developing the arguments on value, supporting your proposition and helping to strengthen your position - both in the market and with shareholders - and so to increase the chances of a successful result.
For companies making hostile public bids, we prepare reviews on the bidder's own business and analysis of the vulnerability of the target; and
For companies defending a hostile public bid, our review helps the company's management team position itself well in the eyes of the markets during the bid.
We advise companies, entrepreneurs and shareholders throughout the transaction process. Starting with deal origination, we work with you to understand your growth strategy and, using our sector expertise and international reach, we can help you to identify and assess potential acquisition and bolt-on targets. We coordinate other advisers' input and assist in negotiations through to completion.
In any transaction, the Sale and Purchase Agreement (SPA) represents the outcome of key commercial and pricing negotiations. Purchasers and Sellers are becoming increasingly sophisticated in seeking to exploit the potential value to be gained through the negotiation and execution of the SPA.
Our team provides expert support at all stages of a transaction from pre-deal work through to post-completion support. Pre-deal, the team assists in the identification and articulation of value issues related to pricing and deal completion mechanics, to assist clients in their SPA negotiations; Post-deal, the team assists clients in protecting or generating value through the execution of any SPA completion mechanism.
You are contemplating the disposal of a business and wish to consider the relative merits of 'locked box' and other completion mechanisms in the context of your transaction;
You are making a disposal and wish to guard against price erosion by potential acquirers, both through the determination of consideration to be paid and through any post completion mechanism;
You are making an acquisition and wish to ensure that potential 'debt-like' items and other financial risks have been identified and appropriately addressed, either by way of a reduction in consideration, through a completion pricing mechanism within the SPA, or through warranties and indemnities; and
The transaction being contemplated includes a post completion pricing mechanism. You are seeking to position the SPA to your advantage and to minimise the opposing party's potential to manipulate price.
We can assist you and your advisers in considering the adjustments to be made between Enterprise Value and Equity Value and in formulating the arguments and counter-arguments required to justify your proposed approach
We can advise you in your determination of the appropriate financial benchmarks (or appropriate adjustments to price in the case of a 'locked box' (fixed price) mechanism) and related arguments, for the purposes of price negotiation and drafting the SPA
We can advise you in your analysis of the working capital requirements of the Business with a view to you determining the normalised working capital for the purposes of your negotiation of the SPA
We can work with you and your financial due diligence team to assist you in mitigating the risks identified during the due diligence phase
We can advise you in your negotiations of the accounting aspects of the SPA. Such advice would include commentary on the pricing mechanism, relevant representations and warranties (if any), any other accounting related clauses of the SPA and any dispute resolution mechanisms related to the purchase price adjustment (including as appropriate, consideration of tax related items)
Olivier Ma, ACA, CFA
Partner, PwC Mauritius
Tel: +230 404 5044