M&A transaction support

What is happening

A buyer is acquiring a going retail chain or production business and sees only what the seller has shown it: tidy accounts and a list of contracts. What lies behind them, whether debts, pledges, tax claims or lease disputes, is still unknown.

An owner is selling the company to a strategic investor, and the buyer sends a fifty-page draft agreement with sweeping warranties and unlimited seller liability. The seller needs to know what is market practice and what should be removed or capped.

The parties have agreed the price, but the deal is held up by approvals: merger control, consent from the pledgee bank, special permits because foreign parties are involved. The timetable slips, and every week of delay carries risk.

What the law says

• An agreement for the sale of a stake in an LLC is, as a rule, notarised under Federal Law No. 14-FZ of 8 February 1998 "On Limited Liability Companies"; title to shares passes when the entry is made in the buyer's register account.
• The Civil Code allows the agreement to include representations as to circumstances and indemnities for losses: the seller answers for the accuracy of what it says about the company, and the parties fix in advance which losses are covered and within what limits.
• Transactions above the asset or turnover thresholds require prior consent from the competition authority under Federal Law No. 135-FZ of 26 July 2006 "On Protection of Competition"; without it the transaction may be challenged.
• Transactions involving foreign parties from certain states are subject to a special permit procedure through a government commission, and separate foreign investment controls apply to strategic companies. Both need to be built into the timetable.
• Payment can be secured through an escrow account, a letter of credit or a notary's deposit, so that the seller is paid once the closing conditions are met.
• Deferred consideration, earn-outs and options to buy or sell further stakes are built on Civil Code instruments and have to be carefully aligned with the corporate documents.

What we do

• We carry out legal due diligence: corporate history, title to assets, liabilities, litigation and tax risks, key contracts and their change-of-control terms.
• We propose the deal structure: a share or asset purchase, a staged acquisition, a reorganisation, and the payment mechanics.
• We draft and negotiate the documents: the heads of terms, the sale and purchase agreement, warranties and representations, indemnities and a shareholders agreement with any remaining participants.
• We identify the approvals needed, from merger control and creditor banks to special permits, and see them through.
• We negotiate on the client's side and coordinate the valuers, auditors and tax advisers.
• We manage closing: notarial steps, payments, registration and the handover of documents, sites and management to the new owner.

What we will need from you

• An outline of the deal: what is being bought or sold, the indicative price and the expected timetable.
• For a buyer: the information on the target you already have and access to the data room, if one has been set up.
• For a seller: constitutional documents, title documents for the assets, key contracts and details of disputes and inspections.
• Details of the buyer's and seller's groups, including any foreign participation, to assess which approvals are needed.
• Any draft heads of terms or term sheet the parties are already discussing.