Over the past decade of operating my advisory firm, Euro-Phoenix, I have encountered relatively few instances where a financial advisory firm knowingly breached laws, industry or ethical standards; instances of overt contravention are relatively few and far between.
That does not mean that users of corporate finance advisory services should just assume that the issue of ethics is not important. Ethics are of paramount importance. Allow me to mention some areas where ethical issues can arise:
On the one hand one might say that selling companies is the same anywhere in the world, and there is some truth to this: intellectually, the concepts are the same, the steps to the process are the same, and the reasons for transactions succeeding or failing have common elements all over the world. Having worked on transactions covering more than 40 countries, I can testify to these similarities.
Almost every business owner dreams of hitting the jackpot by going public on a stock exchange. Yet when many find out what is involved in taking their company public, they recoil in horror, rapidly coming to the conclusion that this is not for them. This article summarizes the pros and cons of going public for mid-sized businesses in Central Europe.
The case against going public
The case against going public could be summarized under the following headings:
If you are looking to undertake a transaction such as raising capital or selling your company, a lawyer will be a vital part of your team. This article will first describe the role that a lawyer will typically play in a transaction, then provide guidance on how to select a firm or individual who may best fulfill that role.
The lawyer’s role in a transaction
There are many legal dimensions to a transaction, including:
A financial advisor, like a lawyer, may be an effective advocate of a client’s interests and provide valuable advice that can make the difference between success or failure of a transaction, or provide advice whose implications may be measured in the many millions of euros. And yet there seems to be a pattern of questions and expectations that reveals a lack of understanding of the limitations surrounding the role of financial advisors. I summarize these in the following three “DON’TS” to bear in mind when hiring a financial advisor:
In this article, we will deal with three issues: (1) What is a competitive process? (2) Why use a competitive process in selling a business? and (3) What are the possible drawbacks or limitations of a competitive process?
1. What is a competitive process?
The sale of a company is typically not one negotiation, but a series of negotiations— from negotiating the confidentiality agreement, to negotiating the term sheet and then the Sale and Purchase Agreement. There are often unexpected negotiations mid-course as well, such as may be necessary when the seller’s company does not meet the budget, or there is a currency exchange fluctuation or loss of a contract, which changes the value of the company.
Mezzanine financing may be used both as a way of raising expansion capital for an enterprise or for financing the acquisition of an enterprise. As the name implies, in the financial mix of a firm, mezzanine financing is located between the “ground floor” of equity and the “first floor” of debt (e.g. mezzanine finance is a hybrid instrument containing features of both debt and equity). In this article we will take a look at the option of mezzanine financing as a source of capital.
1. What is mezzanine financing?
This article is designed to assist company owners in understanding what is involved in preparing an Information Memorandum (IM), during the process of selling a company. It deals with four questions:
What is an IM?
One of the crucial phases of selling a business occurs when the seller, usually supported by advisors, establishes a data room to permit one or more investors to perform detailed due diligence. Depending on the size and complexity of the company being sold, a data room may contain thousands or even hundreds of thousands of documents, including all relevant client, supplier, employee, financing, and other contracts, as well as title documents, board minutes, and many other documents. Indeed, any document that could have an impact on the value of the company should be in the data room.
