M&A

It is a comprehensive audit of the target (buy-side) or of your company (sell-side): corporate, contracts, litigation, IP, employment, compliance. The objective is to identify the risks (red flags) and to feed the negotiations on price and warranties (representations & warranties (W&I / liability guarantee)). Due diligence generally lasts from 2 to 6 weeks.

The LOI (letter of intent) is a non-binding pre-contractual document setting out the main lines of the transaction. The term sheet is more detailed, often binding on certain points (exclusivity, confidentiality). The SPA (share purchase agreement) is the definitive sale contract setting out the price, conditions precedent, warranties and closing terms.

Representations & warranties (W&I / liability guarantee) protect the buyer against risks not identified during due diligence that would materialise after closing (unknown litigation, tax debt, etc.). They set the covered scope, the cap, the duration (generally 2 to 3 years) and the conditions for enforcement. They are a central element of negotiation.

From 3 months (small transaction) to 9-12 months (complex deal with multiple jurisdictions, in-depth audits, financing). The main stages: LOI (2-4 weeks), due diligence (4-8 weeks), SPA negotiation (4-8 weeks), signing, then closing (satisfaction of the conditions precedent, 1-3 months).

An LBO relies on an acquisition holding company that takes on debt to buy the target, then repays the debt using cash upstreamed from the target. You need to structure the holding company (SAS, SLP, etc.), negotiate the financing documentation (senior, mezzanine), set up a management package (BSPCE, preferred shares) and draft a robust shareholders' agreement.