Business
Episode 2 of the Curious Kiwi Capitalist Podcast Show 9th August 2019 My guest for this show is David Quigg. David is the head of Mergers & Acquisitions at Quigg Partners a boutique Wellington law firm specialising in M&A and a few other specialist areas. In this show we'll discuss M&A from a lawyer's perspective including: publically listed company M&A process and the differences with private company M&A a practical approach to buying and selling a company including agreeing on key terms in an MOU (while being careful about what is binding) how a fixed auction process is unusual in a private M&A transaction unless it is a large transaction NDAs, key clauses and enforecement Earn-out briding a price gap but causing problem down the track the need for early OIA approval in the case of a foreign investor due diligence and retentions representations and warranties shareholders agreement, including drag-along carry-along and Russian Roulette clauses why asset sales (rather than share sales) are preferred by buyers even in larger transactions if possible net asset adjustments in a share sale Show Notes About David David Quigg has a LLM, was a member of the NZ Takeovers Panel for a decade and has an international reputation as one of New Zealand's top M&A lawyers. Quigg Partners were established in 2000 and now have 17 lawyers. You'd recognise a number of famous international and local company names they have represented over the years. Links David Quigg and Quigg Partners "M&A and Business Sale Legal Process with David Quigg" show notes. Transcript: M&A and Business Sale Legal Process with David Quigg Bruce: Welcome David to the podcast. David: Thank you very much indeed Bruce. Bruce: Thank you for doing this, it's a complex area this particular part of the M&A process and I'm sure the law as well. What's the process that you see and where do lawyers get involved in that M&A process? David: The first one is probably to differentiate between public M&A and private M&A. Public M&A is a lot more in the public domain. It's much more regulated by the Takeovers Act or if you're doing a scheme of arrangement the rules that govern schemes and also you've got the factor in the stock exchange listing requirements, insider trading restrictions etc. Yet private M&A is perhaps less of that regulatory regime and much more contractual and negotiation in private as well. So from a lawyer's perspective differentiating between those two kinds of Alternatives is quite critical and you'd have to say in New Zealand we don't have a huge amount of public M&A. So the the public M&A amount perhaps our last involvement was for McDonald's in respect of the investment and Plexure that is kind of one-and-twenty as in the public M&A space. Most of the New Zealand transactions is in the private M&A and its contractual based. Bruce: Yes. Perhaps let's talk about the simpler process first the private M&A and then at the end if we have time talk about the differences with public. When a client approaches you and they might be selling or acquiring, what's the process that you see perhaps for a mid market size business, perhaps choose your figure choose your transaction time. And as you go through that process where do they ask for advice? David: I think the earliest they get the lawyers involved the better. Now, that's obviously a bit of a self-serving statement. The beauty of getting the lawyers involved in particularly ones that do a lot of these transactions it is they get those milestones quickly and you make good progress and you can set a realistic timetable. The first one that normally comes up is the discussion about should we have a term sheet, heads of agreement etc? In New Zealand would strongly recommend that you do because what that does do is get agreement on price. So that's not legal agreement, that's a commercial agreement. So all things being equal. I'm prepared to pay $20M say for the tech business tha...