Stout’s Post

Alex Mazer will be speaking on a panel called "Finding Price Through Process: Insolvency Options to Drive Acquisition Value," at the Private Equity Executive Conference. Event hosted at RPM Seafood starting at 1:30, on Thursday, May 16. Panelists will provide an overview of different restructuring processes to purchase distressed assets - including receiverships, assignments for the benefit of creditors, foreclosures, and bankruptcies - discuss the pros and cons of each process, and provide tips and recommendations for how a private equity buyer can best position itself in a process. 

"How do you ensure a fair process when shareholders want to sell their shares, without sacrificing control or flexibility? 🤔 A 𝗦𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀’ 𝗔𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁 typically contains provisions that govern the transfer of shares, and two critical clauses stand out: the 𝗥𝗶𝗴𝗵𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗢𝗳𝗳𝗲𝗿 (𝗥𝗢𝗙𝗢) and the 𝗥𝗶𝗴𝗵𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗥𝗲𝗳𝘂𝘀𝗮𝗹 (𝗥𝗢𝗙𝗥). Although these clauses might seem alike, the way they impact a shareholder's ability to sell their shares differs significantly. 🔹 𝗥𝗶𝗴𝗵𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗢𝗳𝗳𝗲𝗿 (𝗥𝗢𝗙𝗢): If a shareholder wishes to sell their shares, they are required to offer them to the existing shareholders first, before seeking buyers outside the company. This means that the existing shareholders have the initial opportunity to negotiate a deal and potentially buy the shares at a price determined internally before the shares hit the open market. 🔹 𝗥𝗶𝗴𝗵𝘁 𝗼𝗳 𝗙𝗶𝗿𝘀𝘁 𝗥𝗲𝗳𝘂𝘀𝗮𝗹 (𝗥𝗢𝗙𝗥): In this case, the selling shareholder is free to find an external buyer and negotiate a price. However, before finalizing the deal, they must give existing shareholders the chance to match the offer. This allows existing shareholders to step in after a price has been set by a third party, essentially reacting to an external deal rather than initiating the offer. So, what’s the main difference? ROFO provides shareholders a proactive role, while ROFR gives them a reactive one. Depending on the dynamics of your company, one may be more beneficial than the other. 💡 𝗕𝗼𝗻𝘂𝘀 𝗜𝗻𝘀𝗶𝗴𝗵𝘁 – 𝗣𝗿𝗲𝗲𝗺𝗽𝘁𝗶𝘃𝗲 𝗥𝗶𝗴𝗵𝘁𝘀 𝗖𝗹𝗮𝘂𝘀𝗲: This clause helps protect shareholders from dilution by ensuring they have the first option to purchase newly issued shares in proportion to their existing holdings. It's a powerful tool to maintain control over ownership percentages when a company is raising capital. Had an enlightening session with Abhipriy Burman on the key provisions of Shareholders Agreement. As always, a huge thanks to Rajnandini, Ramanuj, Abhyuday and LawSikho for making this happen. Understanding these provisions can make all the difference in maintaining the balance of power within your company. How are these clauses shaping your business decisions?" #ShareholdersAgreement #CorporateLaw #ROFO #ROFR #PreemptiveRights #BusinessStrategy #ShareholderControl #BusinessGrowth

In Roger Margand's latest Commercial Update he provides a concise guide on navigating the valuation challenges involved in valuing shares during the takeover or purchase of a limited company. 💰 Read here: https://lnkd.in/ezKPEjqg #BusinessValuation #LimitedCompany

The importance of a strong shareholder agreement must not be underestimated, both from a general perspective and from a specific M&A perspective. Having one can help remove a number of potential future headaches if put in place correctly and help shareholders navigate through stressful scenarios as efficiently as possible.

❓What is a shareholders agreement and why is one needed❓ 📑A shareholders’ agreement is a contract entered into by the shareholders of a company and often the company itself. It regulates the relationship between the shareholders and governs the management of the company. 🔑Below are some important points for having such an agreement in place ➡️Disputes: A shareholders agreement is an inexpensive way to minimise any potential for disputes as it provides a framework and procedure for dispute resolution by outlining how certain decisions are to be made. ➡️Governs how the company is run: Directors have the day to day running of the company, but the shareholders will decide on the bigger decisions for the company. The Shareholders agreement will set out what decisions can be made by the shareholders and the level of consent required from each of them. ➡️ Protection for minority shareholders: the agreement can also contain “tag-along” provisions. This allows a minority shareholder to “tag along” in a share sale situation where the majority shareholders attempt to sell their shares to a third party buyer. A “tag along” clause gives minority shareholders the right to receive the same price, terms and conditions as the majority shareholders that are selling their shares. ➡️ Protection for majority shareholders: the agreement often includes a “drag along” provision to go alongside the “tag along” provision mentioned above. A drag along provision enables majority shareholders to force minority shareholders to join in the sale of a company on the same terms so they do not prevent the deal from going ahead. ➡️ Control the transfer of shares: the agreement can provide a mechanism to provide that if one shareholder wishes to transfer/sell their shares, the remaining shareholders have the “right of pre-emption” over those shares. 💡Having such an agreement in place will provide clarity for all shareholders and the role they have to play in the company! #shareholders #agreements #companylaw #limitedcompany

Ensure Smooth Business Transitions. Navigating buy-sell agreements, shareholder disputes, or ownership transitions? Our expert team at Magnus McGee delivers fair and defensible valuations to facilitate seamless transactions and prevent conflicts. Secure your business future today. Call us at 248-209-5155 and let Magnus McGee guide you! #BusinessValuation #BuySellAgreements #ShareholderDisputes #BusinessTransition #FairValuations #MagnusMcGee

INSIGHT | Corporate takeovers done lawfully: A guide for unlisted public companies in growth mode After agreeing to a possible future issue of shares to the sellers of Ringers Western Pty Ltd, the buyer, an unlisted public company, raised capital from new investors and increased to more than 50 shareholders. Piper Alderman partner Lis Boyce discusses this issue. Read the complete article here: https://lnkd.in/gGEaV3_E #MergersandAquisitions #CorporateTakeovers #PiperAlderman

Let's look at the areas where a good shareholder agreement can benefit a business and its shareholders. Read more in our latets insight: https://lnkd.in/eCw-WVZa

❓What is a shareholders agreement and why is one needed❓ 📑A shareholders’ agreement is a contract entered into by the shareholders of a company and often the company itself. It regulates the relationship between the shareholders and governs the management of the company. 🔑Below are some important points for having such an agreement in place ➡️Disputes: A shareholders agreement is an inexpensive way to minimise any potential for disputes as it provides a framework and procedure for dispute resolution by outlining how certain decisions are to be made. ➡️Governs how the company is run: Directors have the day to day running of the company, but the shareholders will decide on the bigger decisions for the company. The Shareholders agreement will set out what decisions can be made by the shareholders and the level of consent required from each of them. ➡️ Protection for minority shareholders: the agreement can also contain “tag-along” provisions. This allows a minority shareholder to “tag along” in a share sale situation where the majority shareholders attempt to sell their shares to a third party buyer. A “tag along” clause gives minority shareholders the right to receive the same price, terms and conditions as the majority shareholders that are selling their shares. ➡️ Protection for majority shareholders: the agreement often includes a “drag along” provision to go alongside the “tag along” provision mentioned above. A drag along provision enables majority shareholders to force minority shareholders to join in the sale of a company on the same terms so they do not prevent the deal from going ahead. ➡️ Control the transfer of shares: the agreement can provide a mechanism to provide that if one shareholder wishes to transfer/sell their shares, the remaining shareholders have the “right of pre-emption” over those shares. 💡Having such an agreement in place will provide clarity for all shareholders and the role they have to play in the company! #shareholders #agreements #companylaw #limitedcompany

🎖Equity Series # Asked in Moelis & Company IB Q. While doing a Liquidation Valuation for a distressed company why don't we just use the Shareholders’ Equity number for its value? Isn’t that equal to Assets minus Liabilities?😳 A. 💁In a liquidation valuation you need to adjust the values of the assets to reflect how much you could get if you sold them off separately.🙋♂️ You might assume, for example, that you can only recover 50% of the book value of a company’s inventory if you tried to sell it off separately. 🙆 Shareholders’ Equity is indeed equal to Assets minus Liabilities🧏♂️ But in a Liquidation Valuation we change the values of all the Assets so we can’t just use the Shareholders’ Equity number.🧏♂️🧏♀️🧏 #Finance #Valuation #Interview #careergrowth