TRANSACTIONS, MERGERS, M&A TAKE-OVERS

Running a business and thinking about selling shares/the business? Wishing to start negotiations with potential industry investors but don’t know where to start and what to bear in mind? How to prepare? How to negotiate exit terms? How to secure your interests?

Is the company ready?

If your company has been growing organically for many years, it is worth having a preliminary audit performed by advisors specialised in investment processes. Polish companies have been through many turbulences and worked incredibly hard to be now able to boast of their achievements. Frequently, their ultimate goal had been to achieve operating and financial stability owing to simplified legal instruments (sole proprietorship or a partnership, loans from private funds, personal property in a company etc.). The greatest worry of Polish companies is excessive dispersion of operations between several business units. Such things must be sorted out before the company starts advanced negotiations with any investor.

How to conduct negotiations

Company/start-up building their value and scale:

It is very important not to expect too much (or offer too little) when negotiating with an investor, and vice versa. Giving away too many shares may significantly weaken the position of the company’s founders. And their presence may be crucial for the next rounds of obtaining capital and ensuring success of the business.

It is important that you plan not just this one round but also subsequent moves taking into account the company’s plans – offering a too small package of shares or overvaluation of the company may discourage investors before they even start actual negotiations. Please note also that negotiations should be conducted differently with investors in Poland (private investor expecting a specific degree of influence and control), and with various types of funds (oriented at growing the value of their entire companies portfolio or at rapid value increase and further resales etc.), or with foreign investors (private investors represented by Family Office, or with VC/VB/PE funds etc.).

Mature company – sale:

This situation is particularly interesting and involves many tricky aspects. First of all, the company and its owners (and shareholders) must be prepared for sale (all elements which might reduce the desired price must be reviewed and, preferably, eliminated). Secondly, you should have an experienced transaction partner when negotiating, to protect the shareholders against any risks of future penalties or failure to get the price due to convoluted terms and conditions offered by the investor (the buyer). Finally, it is worth taking care of personal interests of each of the shareholders selling their shares, and of further use of assets acquired.

How do we help

We help finalise the transaction if the company already has negotiated the business terms, but we can also provide a 360-degree service, meaning:

• we conduct an analysis, a legal and tax audit if necessary to prepare the seller for the transaction (vendor’s due diligence)
• We assist in negotiations.
• We prepare investment agreements having in mind not only securing the Company, the Board, and minority shareholders.
• We work in many areas. In addition to legal services and tax consultancy, our team provides support in business negotiations (concerning transactions and commerce) both in Poland and abroad.
• We represent our clients in regulatory bodies (such as UOKiK [the Office for Competition and Consumer Protection], KNF [the Polish Financial Supervision Authority], courts, and tax authorities.
• We support our clients following the transaction – how? – we make sure that payment due for the transaction is made, agreed terms are implemented, and the other party’s obligations are performed.
• Together with CENTRE company, an associate of Panasiuk & Partners, we deliver projects involving procurement of facilities for investment or acquisition purposes. We provide services to capital-seeking companies – more at: centre.consulting

Project examples:

MEDIATIONS – GETTING BACK TO THE NEGOTIATIONS TABLE AND SUCCESSFUL COMPLETION OF THE TRANSACTION

We have completed the negotiations process aimed at resolving the differences and reaching an agreement on deal breakers that the legal teams of both transacting parties had been previously unable to resolve. At the Company’s request, our law firm agreed to mediate and managed to successfully close the transaction of sale of a Polish FIN-TECH company to a foreign investor based in the UK.

INVESTOR’S ENTRY TO A NEW TECHNOLOGIES START-UP

Preparation of investor entry to QNA Technology sp. z o.o. (nanotechnologies) – drafting the investment agreement, negotiations, amendments to the articles of association, implementing and handling the transaction. In addition to this, preparation of the company and its shareholders to the strategic investor’s entry, for instance by devising and implementing a legal instrument securing the founding shareholders’ interests in negotiations with the investor.

VENDOR’S DUE DILIGENCE – PREPARING A COMPANY FOR THE INVESTOR’S ENTRY

Preparing Sigmoidal group companies (IT industry) for entry of a third-party investor, including support for the client in internal audit (vendor’s due diligence), attending negotiations.