Understanding Corporate Finance Documents

1 Day In-House Training Course

Participants will gain an understanding of the principal points for negotiation in the core documentation required for the successful execution of corporate finance deals.

This course is also available on video
14 videos (4 hours 27 minutes)

This 1-day, in-house, training course focuses, from a practical point of view, on the content and terminology of specific documents and their intended consequences.

Particular problem areas are highlighted so that corporate financiers will achieve an appreciation of the objectives that their lawyers should be seeking to achieve on their behalf.

Such knowledge should enable commercial negotiations to proceed more smoothly and potential ‘deal breakers’ to be identified at an early stage. Problems can then be resolved informally as they arise rather than in marathon negotiating sessions where the positions of the parties may have become entrenched.

Course Outline

  • The Mechanics of a Legal Agreement

    • Structure of an Agreement – boilerplate, reasons for house style and usual content
    • Pre-Conditions – don’t give the purchaser a one-way option
    • Covenants – extra vigilance where exchange and completion are not concurrent
    • Representations, Warranties and Indemnities – what they mean and how they differ
      • Vendor’s Misrepresentation – innocent, non-contractual, negligent or fraudulent?
      • Purchaser’s Remedies – rescission or damages (for deceit, breach of contract or tort)
    • Joint & Several Liability – who pays the damages?
    • Purpose and Scope of Warranties – what they seek to achieve
    • Vendor Protection Clauses – how a vendor should limit the effect of the warranties
    • Vendor’s Disclosure Letter – how it dilutes a purchaser’s remedies
    • Purchaser’s Protection & Remedies – extending protection and when to use indemnities
  • Initial Documentation

    • Confidentiality Letter – what protection does it offer and what else can it be used for?
    • Business Plan – adapt it to borrow money, sell the company, raise private equity or float
    • Information Memorandum – three conflicting objectives to be resolved
  • Supporting Documentation

    • Letter of Intent & Heads of Agreement – what they are for and when to use them
    • Exclusivity Agreement – when to give exclusivity and when to take it away
    • Comfort Letters & Side Letters – useful for oiling the wheels of a deal
    • Hold Harmless Letter – auditors for vendors should insist on one
  • Subordinate Documentation

    • Shareholders Agreement – limiting majority control, agreeing future relationships
    • Service Contract – not to be overlooked: happy clients are repeat business
    • Consultancy Agreement – sometimes more effective than a service contract
    • Option Agreement – a painless method of paying for future services?
    • Accountants Report – long and short form reports & working capital statement
  • Flotations

    • General Offer or Placing – when are they used?
    • Offer for Subscription or Offer for sale – what is the difference?
    • General Duty of Disclosure – extent of duty and consequent reputational and legal risks
    • Verification Notes – reduce the possibility of defective disclosure
    • Underwriting Agreements – hard or soft underwriting and force majeure

Course Notes, Slides and Exercise

Participants will receive a booklet containing copies of 15 slides, 54 pages of very comprehensive notes and 61 pages of extracts from specimen corporate finance agreements. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.

During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.

Exercise 1

You advise on the drafting of a shareholders’ agreement for a new nanotechnology company with eight shareholders. You consider what blocking percentage of votes would be appropriate and suggest how else the interests of the minority shareholders might be protected so that the business is managed along the lines initially agreed between the parties.

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