The law firm Gérard PICOVSCHI advises multinational industrial and service companies in structuring and completing domestic and cross-border mergers and acquisitions.
We have extensive expertise in both public and private M&A transactions and regularly work on buy-side and sale-side engagements in a variety of industries.
M&A transactions are extremely time sensitive and law firm responsiveness represents a significant tactical advantage. To meet the challenges posed by this environment, we assemble a team for each transaction. Experienced M&A lawyers with state-of-the-art knowledge regarding structures, tactics, and legal developments are at the team?s core. The rest of the team has expertise in such areas as antitrust, intellectual property, tax, and employee benefits.
You will find hereafter the M&A approach that our law firm would normally provide when retained to find targeted acquisitions for a client.
Before any acquisition, there are some key questions that must be satisfactorily answered before the buyer will agree to the operation.
What does the target company look like ?
In today?s business environment, timely and accurate intelligence is an absolute necessity. This is the reason why before acquiring a target company, you have to plan a due diligence.
Due diligence investigations not only protect your current or future investment, but they safeguard your company?s reputation.
You will never be 100 percent certain that your business relationships will work out as planned, but a due diligence goes a long way towards ensuring a beneficial, rather than detrimental, deal.
Our law firm will help you to prepare this important step. Whether it is a limited public records search, or an in-depth investigation, we will put our due diligence team to work to make sure your deal meets your business objectives.
Due diligence investigations encompass a wide variety of investigative techniques. You will find below a brief overview of the due diligence process.
From a legal standpoint, it is necessary to check :
- The legal structure of the target company : according to it is a partnership or a private limited company, the legal procedure will not be the same (for instance : which executive body has to be consulted ? When do you have to consult it ? Which quorum need to be obtained for authorizing the operation ?) ;
- The contracts signed by the target company : it is not unusual to detect some anomalies. This is the reason why a deep audit of each contract signed by the target is absolutely necessary ;
- The conflicts (or potential conflicts) in which the target company is involved : is there a financial risk ? Is it possible to calculate it ? Is it significant ?
From a social standpoint, it is also essential to know :
- How many employees are there in the target ?
- Is there a workers union inside the target company ? What will be its reaction ? Is it possible to anticipate it ? Is there a strike risk ? What will be its consequences ?
- What is the organic structure of the target company ? Are synergies possible ?
- What is the human resources policy ?
From a tax point of view, you notably need to determine the method of taxation elected by the target company, and its consequences. In other words, is this the most appropriate ?
Moreover, is this possible to reduce the final tax bill ?
The last but not the least section to check is the financial one. It is essential to have a close look at the target?s health.
We may help potential buyers to have a realistic look at the trends and underlying financials of the target. During this initial phase, business ratios and common size financial statements must be calculated. It is essential to answer such questions as :
- What is the future earnings capacity of the company ?
- Does the target have sufficient working capital to sustain growth ?
It is also important to know what is the financial control environment.
Proceeding by this way, we will provide you a realistic insight into the target?s growth potential.
How much the buyer should pay for acquire the target company ?
This section will present an industry-accepted valuation model using several financial approaches, e.g., market value, accounting value of assets and liabilities.
Moreover, according to the legal system applicable to the target company, you have to know that the goodwill is not necessary taken into account in the valuation of the target company.
Considering this important data, the buyer will be able to appreciate more precisely the asking price.
After viewing this section, the buyer should have a realistic value for the target and price range to offer.
What will the purchase ultimately cost ?
Our law firm may help you to optimize, from a tax, social and financial point of view, the acquisition.
We may substantially reduce taxes and socials contributions by creating the most adapted legal entity to your business. For instance, our firm reduces, for company managers, partners and certain categories of personal, the charges and social security taxes from 60 % to about 20 %, all by maintaining the same quality of social protection and coverage.
Moreover, we master the conception of set-up such as the leverage-buy-out (LBO) or joint ventures. Therefore, we are able to provide you the control of the target company more cheaply.
Anyway, wherever the operation takes place, we may ?activate? our network of high-quality lawyers in order to provide you the most suitable advise.
Why pay more when you can pay less !
What is the most appropriate form of financing ?
Although obtaining funding for the acquisition is technically the buyer?s responsibility, we can increase your chances of completing the sale if we eliminate the guess work from financing the acquisition.
Essentially, we need to show the buyer a best funding plan that creatively utilizes all funding sources and financial instruments available to the buyer. In other words, we may help you in drafting a realistic business plan.
This is the reason why we need to know, for instance, how much secured debt can the target borrow against assets, or whether the target will be solvent after acquisition financing.
Is there a growth potential ?
The last but not the least key question could be : what return on investment the buyer can expect from such acquisition ? Do not forget: The M&A need to be a new source of growth.
Therefore, it is essential to determine wether there are income statement or balance sheet line-items that require increasing levels of financial resources. In the same way, it is also important to know if the target will satisfy the financial covenants imposed by a lender.
In today?s increasingly global economy, competent M&A representation requires international expertise. Our lawyers have extensive experience in international transactions and managing the international aspects of M&A transactions.
Considering the complexity of French and European law, any operation of M&A must be cautiously planned and applied. Therefore, our firm may accompanies you in all negotiations and drafting of legal documents related to the acquisition of target company. Because of we are specialized in such operations, our law firm will be the one who will assist you and lead you to the success.
