Pearson Hinchliffe Commercial Law’s longstanding client Lanes Group Plc, the UK’s largest independent drainage specialist, sold its majority stake in Lanes Assistance Services (LAS), a high-tech network management provider for insurance companies, to private equity house Gresham for £12.3 million.
The deal demonstrates, in particular, how Pearson Hinchliffe Commercial Law has the skills and resources to act expeditiously when a client requires a quick solution to a corporate sale process.
Towards end of 2009, an offer was made for the acquisition of the entire issued shareholding of LAS by private equity house, Gresham.
The transactional involvement of the corporate lawyers started at the Heads of Terms stage, where in December 2009 the Buyer’s lawyer drafted a set of terms upon which the purchase would be made. Heads of terms should not be signed off lightly and on behalf of the Sellers we examined the terms in particular having regard to any exclusivity period, during which the Sellers cannot speak to any other potential Buyers, and any costs underwrite, meaning in certain circumstances if the transaction does not proceed the Seller become liable for part or all of the Buyer’s professional fees.
The Heads of Terms were agreed in December 2009, and following the Christmas break the Buyer then entered into a due diligence phase. From a legal perspective this involved the Buyer’s lawyer sending to the Sellers’ lawyer a due diligence questionnaire which sought information in respect of legal and legal-commercial aspects of the company being sold. We worked with the Sellers to provide answers to the questionnaire and any further enquiries made by the Buyer.
At the same time, other forms of due diligence including commercial, accounting, tax and IT were carried out. This was done directly between the Buyer and its professional advisers and those parties responsible for carrying out the due diligence.
Following a satisfactory outcome of the due diligence, the Buyer’s lawyer prepared and sent to the Pearson Hinchliffe Commercial Law a share purchase agreement. This contract sets out the terms of the purchase and contains clauses dealing with the consideration and any mechanisms to adjust this along with warranties and indemnities. A warranty is a contractual promise about the sate of affairs of the company and it is vital that the Seller draws to the attention of the Buyer any maters which appear to run against the warranties (this is known as disclosure) – this process of disclosure is ongoing and it is vital the Seller keeps their lawyer apprised of what is said to the Buyer during the course of the matter.
Aside to the share purchase agreement numerous other documents may be required including leases of property and commercial agreements for the continuity of business.
We worked closely with Lanes’s management team, and other advisers to bring the deal to completion on an expedited timetable while addressing the numerous issues involved. As a result, Lanes was able to successfully execute a transaction that was highly advantageous to all parties at a time of general market sluggishness.
It is a perception that transactions can take long periods of time to bring to a conclusion. However, it is worth noting in this matter, the first draft share purchase document arrived with us only two weeks before formal completion. Whilst achieving this timescale naturally results in a lot of hard work and late nights in the office, client satisfaction is coupled with assurance that adequate time and effort was spent in dealing with the matter to ensure a professional job has been done.
Lead solicitor on the sale, Russell Bateman, commented: “At a time when the market is considered slow this deal demonstrates there are still good quality opportunities. This deal was particularly exciting for the vendors given the short timescales to completion and the ongoing involvement with the company by the vendors following completion.”
The Corporate Commercial team at Pearson Hinchliffe Commercial Law is led by corporate partner Roger Hinchliffe. The project leader on this particular deal was solicitor Russell Bateman.
For more information about Pearson Hinchliffe Commercial Law’s mergers and acquisitions services, contact us at:
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0161 785 3500
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