Some say there are few things more stressful than buying or selling a company or business. It can be so difficult that sometimes the parties involved swear “never again”! So here are our top tips to help things run smoothly when the big day finally arrives…
5 top tips for a successful completion
1. Make sure everyone who needs to sign is available
In order to complete a transaction lots of different documents will need to be signed by different people, in different capacities: buyers, sellers, shareholders, directors, investors, lenders, borrowers, landlords, tenants – the list can be endless. But what if disaster strikes and someone can’t make it?
If it’s known in advance that a signatory might not be available when completion is likely to take place, they can appoint an attorney to sign documents on their behalf. Or, if the physically absent signatory will have access to a computer and a scanner, documents could be sent via email for them to sign and return electronically (see our previous post ‘How to have a relaxing holiday‘ for further tips on dealing with someone’s absence).
2. Check any required meetings can be held
In order to complete a transaction, it’s almost certain that a board meeting will have to be held, whether by a corporate seller or buyer, or by the target company. But will there be enough directors present for the board meeting to be quorate? If this may be a problem, check the articles of association of the relevant company to see if they allow the meeting to be held by telephone or if they permit the director to appoint an ‘alternate’ to act in their place.
The transaction may also require shareholder resolutions to be passed. If enough shareholders are present on the day, these could just be passed by written resolution signed at the completion meeting. Remember, in the absence of any bespoke provisions in the articles, an ordinary resolution requires a majority of more than 50% and a special resolution requires at least 75% consent. If you won’t have enough shareholders present, you may need to circulate written resolutions in advance, making sure you have the requisite number of signatures before the big day arrives. Alternatively, a notice of general meeting could be circulated so that the voting thresholds referred to above apply in respect of the members present and voting at that meeting (rather than the total number of shares issued as is the case with a written resolution). However, whilst this may overcome the difficulty of shareholders being absent from completion, the meeting will need the appropriate quorum and at least 14 clear days’ notice of the meeting will need to be given.
3. Line up any third-party consents
Are any consents required from third parties in order for the transaction to complete? For example, consent from a bank under a facility agreement, a shareholder under a shareholders’ agreement or a landlord under a lease? These consents may be obtained fairly quickly if you know who to ask. However, regulatory consents can take much longer to come through and can significantly delay completion if not sought soon enough.
4. Get your ducks in a row
TV and movies are wrong: large transactions are not completed by someone signing a single piece of paper and then raising a glass of champagne. There will be a significant amount of paperwork to sign and it’s always best to have everything agreed and in final form before the completion meeting begins. However, some changes at the eleventh hour are inevitable so you need to ensure that the people attending the meeting have the authority to make any last minute decisions. And having a solid documents list and a set agenda for the day helps to keep everything on track.
5. Prepare for the long haul
Completion meetings can last a very long time and can even involve a dreaded “all-nighter”. Yet there can also be periods when you might not be doing anything as final points are negotiated, final consents are obtained and documents are amended. So to help get through the day get some strong coffee, invest in a spare shirt and bring a good book!