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Category Archives: M&A and Private Equity

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Increased Flex Amid Record Liquidity in European Leveraged Loans Requires Careful Navigation by PE Firms

By Chris Kandel The European leveraged loan market is going from strength to strength, with a continuing surplus of available credit compared to deal requirements, resulting in very borrower-favourable terms. However, we are seeing signs of a two-tier market emerging, with strong demand and pricing reductions for deals perceived as stronger credits, alongside an increase … Continue Reading

Group Liability for Data Protection Failure – A New Threat for Private Equity Firms?

By Gail Crawford, Hayley Pizzey, Mark Sun, and Calum Warren As European data protection regulators prepare to enforce the General Data Protection Regulation (GDPR) from May 2018, private equity firms must act to minimise the risk of becoming financially liable for the data protection failings of portfolio companies. After a recent spate of high-profile data breaches, … Continue Reading

French Employment and Tax Reforms Set to Boost Private Equity Buyouts

By Matthias Rubner, Denis Criton, Olivia Rauch-Ravise and Bénédicte Bremond President Macron recently unveiled employment and tax reforms to increase France’s appeal for deal makers. While France ranks highly as an investment destination for private equity firms, complex and inflexible French employment laws have been perceived as a hindrance — perpetuating the belief that France can … Continue Reading

CMA Imposes Fixed Penalty on Hungryhouse for Failure to Comply With Information Request

By Jonathan Parker and Anuj Ghai Summary The Competition & Markets Authority (CMA) has imposed a £20,000 fixed penalty on Hungryhouse Holdings Limited (Hungryhouse). The CMA imposed the penalty under Section 110 of the Enterprise Act 2002 (EA02) for failure to comply, without reasonable excuse, with a requirement the CMA issued in a notice pursuant to section … Continue Reading

Can Overseas Bidders Guard Against M&A Risks in An Increasingly Economically Nationalist Europe?

By Richard Butterwick, Jonathan Parker, Jana Dammann and Katie Campbell Growing economic nationalism is threatening to impact M&A across Europe, as governments and regulators take an increasing interest in “foreign” acquisitions of nationally important companies. Deal teams have previously focused on established national security review regimes, including the Committee on Foreign Investment in the US … Continue Reading

Traditional UK Employment Law Means Gig Economy Transactions Could Be Hard Work For M&A Deal Teams

By Sarah Gadd and Katie Campbell Companies operating in the “gig economy”, using a largely self-employed workforce, have enjoyed enormous growth in recent years and have made popular M&A targets. In the UK, these companies have come into conflict with long-established employment law. In our view, current laws are not fully equipped to deal with … Continue Reading

Innovative Insurance Products Address Legal Issues in Public M&A

By Richard Butterwick, Stuart Alford and Katie Campbell Dealmakers’ appetite for transactions involving publicly listed companies remains strong — 2016 saw an increase in deal volume, a trend which continues into 2017. However, deals remain challenging, partly due to limitations on bidder deal protections and financing requirements. In response, innovative products have been developed by … Continue Reading

Break Fees Can Cause Broken M&A Deals

By Oliver Browne, Katie Campbell and Ashleigh Gray Given ongoing competition between buyers in a strong sellers’ market, the resilience of seller break fees as a feature of the European M&A market is surprising. According to the Latham & Watkins 2017 European Private M&A Market Study (which examined over 190 deals signed between July 2015 and … Continue Reading

Individual Accountability for PE Executives Continues to Increase Under Legal and Regulatory Changes

By Simon Baskerville, David Berman, Farah O’Brien and Alex Hewett Corporate accountability has been a key focus for UK legislators and regulators since the credit crisis, as authorities have taken action against corporate failings. In our view, this focus is evolving to emphasise individual accountability. Developments enacted by the Small Business, Enterprise and Employment Act … Continue Reading

Pensions Hazard for PE Buyers on Carve-Out Deals

By Catherine Drinnan and Shaun Thompson Corporate carve-outs have become increasingly popular in recent years, as buyout firms scour the market for primary deals. In an environment in which the UK Pensions Regulator (the Regulator) is becoming more active, in our view, private equity buyers must better understand the issues and risks associated with seller … Continue Reading

Economic Nationalism Set to Impact M&A Transaction Approvals Across Europe

By Jonathan Parker, Jana Dammann and Doug Abernethy Growing economic nationalism is threatening to impact M&A across Europe, as governments and regulators take an increasing interest in “foreign” acquisitions of nationally important companies in the name of national security. PE deal teams have previously focused on existing national security review regimes, including the Committee on Foreign … Continue Reading

Early Partial Exits Pose Opportunities and Challenges for Private Equity

By Thomas Tharakan The exit environment recently ranked as the second greatest challenge facing global PE fund managers, according to Preqin’s H1 2017 Outlook report. As buyout firms weigh an uncertain exit outlook, they are increasingly seeking to de-risk early by selling minority stakes in portfolio investments to preferred LPs. Partial exits to LPs have … Continue Reading

New German Foreign Investment Rules Threaten Deal Timetables

By Jana K. Dammann de Chapto and Joachim Grittmann The German government has tightened the rules for its review proceedings for M&A involving non-EU investors, with changes to its German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung) that significantly increase foreign investment oversight. The new rules, which came into force on 18 July 2017, introduce a … Continue Reading

PRI’s Private Equity Terms Guidance Focuses on Environmental, Social, and Governance (ESG) Factors

By Paul Davies, Michael Green and Ei Nge Htut On 13 July 2017, Principles for Responsible Investment (PRI) launched guidance on incorporating environmental, social, and governance (ESG) provisions in private equity fund terms. The publication, Incorporating Responsible Investment Requirements into Private Equity Fund Terms (the Guidance), followed a year-long consultation period with PRI signatories, expert counsel, … Continue Reading

Private Equity and Privilege: Why Recent Legal Developments Matter to Buyout Firms

By Stuart Alford QC, Daniel Smith and Kem Ihenacho Legal professional privilege allows clients to share information with lawyers, knowing it need not be revealed in court. Privilege extends to legal advice generally, and to documents prepared in contemplation of litigation. Privilege has important implications for private equity beyond litigation, and can affect how firms … Continue Reading

Three Fund Issues That Can Unexpectedly Impact Portfolio Company Investments

By Tom Alabaster and Nick Benson Increasingly complex fund structures and documentation mean that analysing how potential portfolio acquisitions interact with the fund at the top of any deal structure is more important now than ever. Investor Excuse Rights for Environmental, Social, and Corporate Governance (ESG) Compliance As investors focus on ESG compliance, requirements for … Continue Reading

Selling to China: Four Key Questions All Private Equity Deal Teams Should Ask on an Exit

By Frank Sun Chinese acquirers are playing an increasingly important role as buyers of private equity sponsored companies — nearly 200 portfolio companies were sold to Chinese entities in 2016. However, in our view, measures taken by the Chinese government to scrutinise transaction fundamentals more closely and slow capital outflows have impacted deals. The number … Continue Reading

Buyout Firms Must Take Action to Respond to Global Cyber Threats

By Gail Crawford Cybercrime has become a critical issue for buyout firms as hackers are increasingly targeting sensitive business data to profit from insider knowledge. According to a Private Funds Management survey of 91 PE houses, 54% of PE firms said they had been hit with a cyberattack, while 45% said cybersecurity was a high … Continue Reading

UK Competition and Markets Authority Increases Thresholds in Updated “De Minimis” Guidance

By John Colahan, Jonathan Parker and Calum Warren On 16 June 2017, following a public consultation on proposed changes, the UK Competition and Markets Authority (CMA) published the “Mergers: Exception to the duty to refer in markets of insufficient importance” guidance, which increases the thresholds for the application of the CMA’s so-called “de minimis” (or … Continue Reading

Changes to Corporate Criminality Offences in the UK Cause Corporate Dealmakers to Review Acquisitions

By Stuart Alford QC, Daniel Smith Proposed changes to corporate criminal offending should cause corporate dealmakers to review the scope of acquisition diligence, particularly in light of the UK Serious Fraud Office’s (SFO’s) increasing use of deferred prosecution agreements (DPAs), as highlighted by the recent Rolls Royce and Tesco cases. Expected Expansion of Corporate Liability … Continue Reading

Warranty and Indemnity Insurance: Practical Pointers

By Nick Cline, Dan Treloar, Katie Campbell Warranty and Indemnity (W&I) insurance, which seeks to bridge the gap between a buyer’s wish for deal protection and a seller’s desire for a clean exit, has become a common product in European M&A transactions. In our view, there is real value in having a thorough understanding of … Continue Reading

Chinese Outbound M&A: 4 Key Questions

By Richard Butterwick, Cathy Yeung, Yilong Du, Karima Salway Overseas direct investment by Chinese companies increased significantly in 2016 to US$212 billion, a 143% increase from 2015. While outbound M&A interest remains strong in China, recent measures taken by the Chinese government to scrutinise transaction fundamentals more closely and slow capital outflows may impact deals … Continue Reading

M&A Deal Terms in 2017: What Can Deal Teams Expect?

By Nick Cline, Robbie McLaren, Katie Campbell Britain’s decision to leave the European Union in June 2016, coupled with the election of Donald Trump as US president in November 2016, gave dealmakers plenty of pause for thought last year – but ultimately did little to derail strategic M&A. Encouraged by the post-Brexit decline in the … Continue Reading
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