Deal Structuring
Devising an appropriate deal structure is an important part of a successful transaction.
The key elements of structuring the right deal are:
- Is the company being sold, or its trade and assets? – There are currently considerable tax advantages for the seller if the company is sold. However a buyer may prefer to acquire the trade and assets, so that the company’s previous history is not inherited.
- Deferred payments/vendor loan notes etc – the proportion of deferred payment to sellers is increasing, as the banks lending ratios have reduced. Ensuring that the tax structure is efficient (it differs significantly depending on the nature of the loan notes) and that the vendors position is balanced is very important.
- Earn-out clauses – used to incentivise the management team or the selling shareholders. The terms of the earn-out should be balanced to ensure that the management are able to achieve their objectives without significant interference.
