PE deal process documents PE transaction documentation a PE fund enters into a range of contractual agreements during the acquisition process which govern each party's rights and obligations at specific points in the investment process.
while documents may vary based on jurisdiction deal type and language some essential documents are found in most mature company acquisition processes.
These documents are produced at different steps during the process with the help of legal advisors.
It is the PE firms investment team that manages these document processes and decides to what extent professional legal advice is necessary.
For some of the documents such as non-disclosure agreements and letters of intent.
Templates exist within P firms which are then modified on a deal by deal case.
The sequence is as follows.
deal sourcing or searching for potential Investments during deal sourcing upon entering into discussions with owners a non-disclosure agreement and da will be signed allowing for information to be shared and kept confidential.
Ndas can also be referred to as confidentiality agreements cas.
These documents will mainly contain information on parties involved. What information is considered confidential legal obligations with regards to confidential information and legal repercussions. If the agreement is breached.
The next stage of the process is preliminary due diligence or initial investigative work on potential Investments.
After preliminary due diligence a first round or non-binding letter of intent. Loi would be sent to business owners.
Usually these letters will introduce the buyer provide reasons for the interest in the Target suggest waste forward and sometimes even provide valuation details.
Then comes formal due diligence or professional business owner assisted investigative work on investments.
The P firm would like to go after.
If owners accept the terms of the letter of intent, they will allow for further detailed due diligence after which a firm offer letter would be sent by the bidder.
The firm offer will reiterate the buyer's interest in the Target reasons for the interest due diligence and expenses incurred to date by the buyer plans regarding the future strategy and ownership and a legal commitment to pay a certain price based on Final due diligence. Also at this point in the process the bitter often requests as a condition of the offer a period of exclusivity where the vendor is legally restricted from entering into any discussions with another bidder and during which the bidder can perform any confirmatory due diligence. This is governed in an exclusive agreement, EA This document will contain the duration of how long exclusivity will last and often also includes the remaining tasks to be done by both parties until closing the deal.
Next up in the transaction process is negotiation and documentation or the final stages of acquisition discussions where terms of the deal are being negotiated and documented.
The bitter Works towards finalizing the offer and negotiations will start on conditions of the acquisition.
These are captured in a sale and purchase agreement SPA.
supported by funding documentation commitment letters and debt term sheets and if there are multiple parties involved a shareholders agreement, Sha which will govern each shareholders' rights during ownership following the acquisition.
Spas and Shas are long and complex legal documents which outline all the terms of the deal including prices to be paid how the price will be paid.
What is being acquired? conditions and governance this final step in the process is the closing period or the period during which agreed documentation and execution steps are being completed.
Once the sale and purchase agreement is completed and signed there will be a period known as the closing period during which equity and debt execution and administrative documentation will be processed and allow for final funding.
These documents include many often hundreds of pages of legal documents that both parties need to sign.
These relate to funding agreements with banks and the GP corporate records and resolutions relating to the Target company and other similar legal paperwork.
Each of these documents will now be investigated in more detail.
