Deal Process

Board Seat Changes: Since the Board of Directors controls the company, voluntary changes made to the Board will result in a change of control without a merger, acquisition, or other transformative transaction. Changes in the private company’s Board of Directors may be made for a variety of reasons. For example, the company may need additional expertise in a certain area for example. A Director may also be forcibly removed by due to a conflict of interest, lack of separation, or compensation.

Due Diligence: Due diligence is an investigation or audit of a potential investment. Due diligence serves to confirm all material facts regarding a sale. Generally, due diligence refers to the care a reasonable person should take before entering an agreement or a transaction with another party.

Engagement Letter: An engagement letter is a letter that documents and confirms the auditor’s acceptance of the appointment, the objective and scope of the audit, the extent of the auditor’s responsibilities to the entity and the form of any reports.

Fairness Opinion: A fairness opinion is a report evaluating the facts of a merger or acquisition. Fairness opinions are compiled by qualified analysts or advisors, usually of an investment bank, for key decision makers. The report examines the fairness of the offered acquisition price.

Integration: Integration is when a company expands its business into areas that are at different points of the same production path.

Legal Opinion: A legal opinion is a legal opinion published in a case. For example, if a judge sets a precedent, challenges an existing law, or provides a novel interpretation of the law, a legal opinion would be published. Likewise, legal opinions from high courts, in which judges are called upon to interpret very complex legal challenges, are usually published.

Letter of Intent (LOI): A letter of intent is a letter from one company to another acknowledging a willingness and ability to do business.

Stock Purchase Agreement (SPA): A stock purchase agreement is a legal document made between a shareholder and a startup company that details the transfer and sale of the startup’s stock to the share holder. The agreement discloses the amount of shares purchased, share price, and payment method.

Tender Offer: A tender offer is an offer the acquirer to the general shareholders of the acquiree to purchase a majority of the equity at a premium. Tender offers are an attempt to gain management control through voting equity. Tender offers are less common for private companies than they are for publicly traded companies.

Term Sheet: A term sheet is a list of specifications and requests outlining the material terms and conditions of a contract. A term sheet may include a time-line to completion (close) of the transaction.