Rapid Dispositions Handbook

Transcription

1 Rapid Dispositions Handbook Second Edition

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3 Rapid Dispositions Handbook Baker & McKenzie Second Edition

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5 Baker & McKenzie 2007 All rights reserved. Save where otherwise indicated, law and practice are stated in this book as at January 1, DISCLAIMER: The material in this book is designed to provide general information only. It is not offered as advice on any particular matter, whether it be legal, procedural or other, and it should not be taken as such. The precedent documents included in this book have not been prepared with any particular transaction in mind. Baker & McKenzie, the editors and the contributing authors expressly disclaim all liability to any person in respect of the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or part of the contents of this book. No reader should act or refrain from acting on the basis of any matter contained in this book without seeking specific professional advice on the particular facts and circumstances at issue. References in this book to Baker & McKenzie include Baker & McKenzie International and its member law firms, including Baker & McKenzie, LLP. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a partner means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an office means an office of any such law firm.

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7 EDITORS NOTE Rapid Dispositions Handbook Editors Note Baker & McKenzie was founded in For more than 50 years, Baker & McKenzie has provided sophisticated advice and legal services to many of the world s most dynamic and successful organizations. With a network of 3,400 locally qualified, internationally experienced lawyers in 38 countries, Baker & McKenzie has expertise in all of the disciplines that are typically relevant to a business disposition transaction. Working in experienced inter-disciplinary teams to advise on corporate, securities, tax, antitrust/competition, commercial, intellectual property, finance, employment, employee benefits, IT, environmental, real property, trade and other compliance and regulatory matters, Baker & McKenzie is in a unique position to assist companies in planning and implementing disposition transactions and to deliver integrated solutions which take into account all relevant business and legal factors. This handbook is intended to help clients (lawyers and non-lawyers) understand the breadth and depth of business and legal considerations associated with disposition transactions and suggests some ways to navigate the transaction journey. This handbook is not a comprehensive treatise; it seeks only to provide a framework for those contemplating a disposition. This handbook was first published in 2003 and this second edition has been updated principally to include updated sample documents contained in the appendices. Baker & McKenzie publishes several other handbooks, including the Related Publications listed below, that look at other transactions in greater depth. Related Publications Cross-Border Transactions Handbook a guide to major legal issues to consider when embarking on a cross-border transaction. International Joint Ventures Handbook a practical guide to assist the business and legal team when assessing, structuring and implementing joint ventures. Post-Acquisition Integration Handbook a guide to major legal issues to consider when integrating an existing and newly acquired business operating in the same field, to save costs, develop synergies and generate value for shareholders. Acquiring Companies and Businesses in Europe a country-by-country introduction to the main legal issues to consider when contemplating an acquisition in Europe. Guide to Mergers and Acquisitions in Asia Pacific a country-by-country introduction to the main legal issues to consider when contemplating an acquisition in Asia Pacific. A Legal Guide to Acquisitions and Doing Business in the United States of America an overview of several areas of US law that are of interest for non-us companies who either plan to enter the US market or already conduct business in the United States. Some editions are focused on investing companies from particular jurisdictions (including Austria, Germany and Switzerland). For further details on any of the information contained in this handbook or to obtain copies of any of the related publications listed above, please contact your Baker & McKenzie contact partner. Further details on the firm, our people and our practice may be found at

8 Rapid Dispositions Handbook Editors Note This handbook is a product of the efforts of numerous lawyers throughout Baker & McKenzie, including the contributors listed below. The editors are extremely grateful to these knowledgeable lawyers for their hard work. Contributing Lawyers Shane Byrne, San Francisco Regine Corrado, Chicago Eliab Erulkar, New York Michael Fieweger, Chicago Peter George, Chicago Stuart Hopper, London Helen Mantel, Chicago Paul McCarthy, Chicago Emery Mitchell, San Francisco John Morrow, Chicago Lewis Popoff, Chicago Dieter Schmitz, Chicago Peter Tomczak, Chicago

9 Rapid Dispositions Handbook Table of Contents TABLE OF CONTENTS SECTION 1 OVERVIEW...1 SECTION 2 MANAGING THE DISPOSITION Assembling the Transaction Team Communications Plan Technology...10 SECTION 3 PRE-DISPOSITION PREPARATION Structuring the Transaction Defining the Target Business Internal Due Diligence Review Antitrust Considerations Accounting Considerations...29 SECTION 4 IMPLEMENTATION Managing an Auction Managing the Data Room Documenting the Transaction...39 SECTION 5 RISK MANAGEMENT AND ALLOCATION Risk Assessment and Management Understanding Risk Allocation in the Acquisition Agreement Managing Specific Risks Protecting Privilege and Work Product...63 SECTION 6 CROSS-BORDER DISPOSITIONS Project Management Internal Acquisition Review Regulatory Issues Structuring...76 APPENDIX 2.1 DISPOSITIONS FLOWCHART (DOMESTIC)...79 APPENDIX 3.1 MERGER CONTROL ANALYSIS...91

10 Rapid Dispositions Handbook Table of Contents APPENDIX 4.1 SUMMARY SCORECARD APPENDIX 4.2 SOLICITATION LETTER APPENDIX 4.3 INTEREST LETTER APPENDIX 4.4 BID PROCEDURE LETTER APPENDIX 4.5(a) DATA ROOM PROCEDURES AND RULES - PHYSICAL DATA ROOM APPENDIX 4.5(b) DATA ROOM PROCEDURES AND RULES - VIRTUAL DATA ROOM APPENDIX 4.6 DATA ROOM CHECKLIST APPENDIX 4.7 DATA ROOM INDEX APPENDIX 4.8 DATA ROOM REVIEW STATUS CHART APPENDIX 4.9 QUICK REFERENCE GUIDE FOR DATA ROOM ATTENDANT APPENDIX 4.10 QUERY TRACKING CHART APPENDIX 4.11 SAMPLE CONFIDENTIALITY AGREEMENT APPENDIX 4.12 SAMPLE LETTER OF INTENT APPENDIX 5.1 RISK MANAGEMENT MATRIX APPENDIX 5.2 APPROACH TO RISK ALLOCATION PROVISIONS APPENDIX 6.1 DISPOSITIONS FLOWCHART (CROSS-BORDER) BAKER & MCKENZIE OFFICES WORLDWIDE...305

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13 SECTION 1 OVERVIEW Rapid Dispositions Handbook Section 1 - Overview Business dispositions are a normal part of corporate life and occur in many different circumstances. For some companies, a disposition may be an exceptional event driven by economic necessity or the need to focus on key business lines. For other companies, including private equity investors, dispositions may be a part of a planned exit strategy from a particular investment or business relationship. Whatever the circumstances in which the disposition is made, sellers objectives are largely the same, namely to: achieve certainty of execution; maximize proceeds; reduce the amount of management time absorbed by the process; shorten the time frame within which the transaction is accomplished; control the costs associated with the deal; and avoid the retention or assumption of liabilities. The successful attainment of these goals depends on the successful planning, organization and coordination of the business and legal teams. This handbook describes and collects best practices in managing a business disposition to help achieve these goals and focuses on the following key areas: transaction management; pre-disposition preparation; implementation; risk-management; and special considerations in cross-border dispositions. In addition, some valuable know-how and tools have been included as appendices to assist in structuring and managing a business disposition. Materials have been Baker & McKenzie 1

14 Rapid Dispositions Handbook Section 1 - Overview included that are intended to be useful both to companies considering ad hoc dispositions and to those companies seeking to institute a program of proactive dispositions. For example, Appendix 2.1 is a flow chart of the decisions, information and actions that typically come into play in a domestic disposition transaction. For a company with a large in-house legal department, this type of business process tool can be useful in defining and standardizing the in-house team s approach to dispositions. For a company that relies heavily on outside advisors, a better understanding of the dispositions process can help the in-house team to better manage outside counsel and determine how to allocate its scarce legal resources to the disposition. 2 Baker & McKenzie