Due Diligence

Conducting thorough due diligence is one of the most effective ways to reduce the risk involved in most major business transactions and to improve the chance of success. In recent years, the practice of due diligence has evolved substantially and the level of detail and analysis now allows companies to take much better commercial decisions. Well conducted and well managed due diligence can help a business transaction run smoothly and can even enable companies to find ways of adding value to major business transactions.

All major business transactions are highly risky – at least 50 per cent fail and numerous other partnerships end in disappointment and acrimony. Due diligence is the essential step to taking the risk out of deals and business partnerships. This programme has been exclusively designed to offer helpful insights and advice to navigate through the maze of services available and put you on the path to completing a due diligence process that delivers successful deals.

This programme will highlight and evaluate the key points to address when embarking on a due diligence project:

• Why is due diligence so important?
• When is it essential?
• At what point do you start due diligence?
• What are the risks of poor due diligence?
• How to avoid common pitfalls?
• What are the key areas to assess?
• Is there due diligence that is specific to my industry?
• What are the issues when the deal is cross-border?

What are the key objectives of this seminar

• Become familiar with the different types of due diligence
• Understand how to select the right processes for your transaction
• Discover the key areas to be researched
• Grasp the due diligence project management process from start to finish
• Examine the key focus area of financial due diligence
• Understand the tax risks and how to mitigate against them
• Know the regulatory hurdles that need to be overcome to complete the deal
• Identify the significant contracts that need to be reviewed
• Examine and understand the key challenges when the deal is cross-border
• Recognise why anti-trust due diligence needs to be carried out
• Evaluate the impact on key employees and how to manage it
• Realise the key considerations post deal to ensure strategy is implemented effectively

Who should attend

• In-house lawyers
• Finance directors
• Managing directors
• Commercial directors
• Company directors
• Business executives responsible for major transactions
• Corporate advisors
• Strategy directors

Corporate strategy training

This course forms part of our unique corporate strategy portfolio, which offers current thinking and practical advice on corporate management of your business.
This includes:

• The Role and Responsibilities of the Company Secretary
  17-18 May 2012, London

• Corporate Acquisitions and Disposals
  29-30 May 2012, London

• The Falconbury Executive Mini-MBA
  9-13 July 2012, Residential

Day One

MODULE 1: STARTING THE PROCESS

Due diligence – The strategic context

• Defining due diligence
• Why acquisitions fail
• Good reasons for acquiring
• Why sales and disposals abort
• When to do due diligence
• Role of the corporate – what to do in-house and when to use advisors
• Benefits of due diligence for refinancing, disposal and turnaround

MODULE 2: COMMERCIAL DUE DILIGENCE

The objectives of commercial due diligence

• Spotting and appraising the risks
• Quantifying the potential costs, and minimising the liabilities
• Understanding the commercial opportunity
• Prioritising future focus and establishing postdeal strategy

Key commercial areas – What’s assessed and how it is done

• Market assessment – size, segmentation, growth, drivers and trends
• Competitive position – advantages, weaknesses and risks
• Sales and marketing performance
• Operational and service performance
• Security and vulnerability of customer relationships
• Security of supplier relationships
• Expected sales and margin growth
• Under-exploited or high priority new opportunities
• Risks and mitigations
• Critical commercial issues to address

Approaches to due diligence of common related areas

• Management
• Technology
• Database
• Cultural
• Operations
• Sales process

Managing dangers and avoiding pitfalls

• Minimising unintended bias
• Recognising and avoiding deal fever
• Reducing management distraction
• Managing reputational risks
• Avoiding process delays

MODULE 3: FINANCIAL AND TAX DUE DILIGENCE

Financial due diligence

• The objectives of financial diligence
• How is financial due diligence done
• Key areas of focus
  • Maintainable earnings
  • Conversion of profit to cash
  • Projections
  • Completion mechanisms (normalised working capital /net debt)
  • Management and financial reporting
• Hallmarks of good/bad due diligence

Tax due diligence

• Assessing tax risks
  • Which taxes to focus on
  • Key risk areas
  • Impact on transaction
• Enhancing post tax returns
  • Negotiation aspects
  • Using tax to increase value
  • Post acquisition hygiene

Day Two

MODULE 4: LEGAL DUE DILIGENCE

Pre-contract arena

• Negotiation skills during due diligence
• Protecting confidentiality
• Statements and representations
• Heads of terms and due diligence obligations
• Liquidated damages

Legal due diligence

• Legal rationale for due diligence
• Scope of different transactions
• Managing the process
• Significant contracts
• Regulatory compliance with laws
• Insurance coverage and related issues
• Litigation and claims
• Understanding the regulatory hurdles to proposed transaction

Cross-border due diligence

• Why do due diligence?
• Liabilities in Common Law and Civil Law contrasted
• The duty of good faith
• Which law applies to the due diligence process?
• Different processes in Common and Civil Law
• Managing a cross-border due diligence process

IP due diligence

• Why IP due diligence?
• What kind of report format should IP due diligence cover?
• What IP rights are owned by the target or under licence?
• Investigating the nature and scope of the claimed rights in the IP
• Identifying and evaluating any IP infringement claims
• Identifying key risks – enforcement, litigation, infringements
• Grants of rights to third parties
  • Pre-completion measures to be considered
  • Need for foreign counsel specialist review
  • Matters for which indemnities should be sought
  • Insurance considerations

Employment due diligence

• Understanding the business and its employees
• Identifying the problem issues
• Checking for compliance with new legislation
• Assessing the cost – now and in the future
• Steps to be taken before completion
• Tailoring warranties and indemnities

Pension due diligence

• What is pension due diligence/why is it necessary
• Identify the type of pension requiring this service
• Potential problems/solutions in pension schemes and liability
• Case studies checklist

Anti-trust due diligence

• Why carry out antitrust due diligence
• The importance of identifying antitrust risks
• Why you should investigate latent antitrust issues for all product areas
• Examining contracts with customers
• Look into previous mergers and business activities

MODULE 5: DELIVERING AN EFFECTIVE REPORT

Managing the process and bringing it all together – The checklist

• Successful project management
• Selecting and working with advisers
• Process timetable
• Managing commercial sensitivities
• Reporting

Reputational impact and key considerations post deal

• What is reputation
• What role does it play in Due Diligence
• What are the issues and considerations
• What requires managing, monitoring and what can be mitigated?
• Using the information gathered
• Managing the risks and opportunities
• Delivering on the strategy

Programme leaders

Steve Hacking is Managing Partner of Latitude Partners Limited. Before this, he was on the management team and co-head of private equity support at the Kalchas Group (a Bain/McKinsey spin-off). He has led more than 100 commercial due diligence projects since 1995. These have ranged in size from less than £1m to multi-billion transactions, for acquirers and vendors, corporates, banks and private investors. Steve also works on the other side of the deal fence, helping businesses prepare for investment and the due diligence process.

Rebecca Kelly M.A. (Cantab) is a Solicitor and ADR Group Accredited Mediator based in Central London. She has worked as a company commercial solicitor at Richards Butler Laytons and in 1993 Rebecca set up Attree & Co, her own solicitor’s practice. Attree & Co provide training in company commercial law, mediation and negotiation services. Rebecca’s professional practice has led her to gain considerable experience in how transactions can be explored, structured, drafted, negotiated and concluded so they work for all parties. Rebecca is also an experienced programme designer and trainer in international and company commercial law.

Expert presenters

James A. Cox is a partner in the London office of Gibson, Dunn & Crutcher and a member of the firm’s Labor and Employment law group. He has extensive experience in contentious and non-contentious labour and employment matters, with an emphasis on corporate governance matters, Boardroom appointments and removals, cross-border employment issues, large-scale redundancies and workforce restructurings, TUPE, the employment aspects of public and private mergers and acquisitions and outsourcing arrangements.

Robin Ellison is a partner at Pinsent Masons, an international law firm. He specialises in the development of pensions and related financial services products for insurers and other providers, and in European and international pensions, pensions trustee law and pensions in matrimonial matters. He is a director of the boards of a number of companies and he is the author of numerous books on pensions including The Pension Trustees Handbook and The Pension Trustees Investment Guide (Thorogood Publishing). He also practices as a commercial mediator.

Suzanne Gowler is the Managing Director of International Agenda a consulting firm focused on corporate strategy and its implementation. Over the last 20 years Suzanne has assisted companies to address business improvement. She is an experienced advisor who has worked on a range of Pre and Post IPO and, Merger and Acquisition deals ensuring strategies and plans are in place to achieve future potential and address short and long term goals.

Mark Jephcott is a senior associate in Competition, Regulation and Trade Department of Herbert Smith LLP. Mark has extensive experience in all aspects of UK and EU competition law. Mark has practised UK and EU competition law for many years in private practice, as well as working for the UK Competition Appeal Tribunal and the European Commission’s Directorate-General for Competition. Mark has acted on a range of major multi jurisdictional mergers, including several requiring clearance of the Chinese authorities. He is also the author of The Law of Cartels – of which the 2nd edition was published in July 2011. Mark has particular experience in advising clients in the consumer goods and retail sectors.

Gautam Mistry is Tax Director in the M&A Tax Team at BDO LLP. Gautam has more than 10 year’s experience in providing to corporate and PE clients commercially driven M&A tax advice throughout the deal cycle, from issues-focused tax input when appraising bids to full due diligence, tax structuring, and modelling input, and value-enhancing post acquisition reorganisations. Gautam has advised on deals in a variety of sectors including infrastructure, health, food, technology, publishing and retail, with targets ranging from SMEs to large multi billion pound MNCs.

Derek Neil is Corporate Finance Director at BDO LLP. Derek has specialised in advising on transactions since 1998. He has advised on international transactions in various industries, with deal sizes ranging from £2m to more than £5bn, including: PartyGaming plc’s recent merger with BWIN interactive entertainment and UK Sports Investments acquisition of Manchester City Football Club. Derek was recently seconded to a private equity house, where he was responsible for evaluating and executing investment opportunities.

Selina Sagayam is a partner in the London office of Gibson, Dunn & Crutcher. Her practice is focused on international corporate finance transactional work, including public and private M&A, international equity capital markets offerings and advisory work focused on corporate governance and securities law advice. She has particular experience in the financial services and TMT sectors. Salima is recognised as having leading expertise in public company M&A, having been seconded to the UK Panel on Takeovers and Mergers.

Nicholas Tall is a partner in the Intellectual Property team at Speechly Bircham LLP. Nicholas advises in connection with all forms of intellectual property rights protection and exploitation and has significant experience in conducting IP due diligence in connection with M&A transactions, as well as in connection with general commercial transactions. Nicholas has particular experience in due diligence in connection with the acquisition of media-related IP rights, including complex literary estates.

Falconbury's Executive Mini-MBA

The Role and Responsibilities of the Company Secretary

Corporate Acquisitions and Disposals

This course qualifies for the following CPD programmes:

• Solicitors Regulation Authority: 12.00 hours