Our Challenge:
After growing their business to more than 30 countries, including subsidiaries in the UK, Turkey and several European countries, the shareholders of this Central-European medical testing device company were approached by an Estonian private equity fund.
The sale involved negotiating a complex price structure, including cash on completion, a completion accounts adjustment, complex earn-out and the roll-over of some equity into shares in the PE fund.
Our Work:
Working with the sellers, we created a clear roadmap which encompassed every aspect of the sale. This included:
- helping the sellers negotiate protections in relation to the rolled-over equity. This allowed them a veto over key matters while their shareholding remained above a minimum level and established the appropriate corporate governance structures to recognise their continuing interest and importance;
- negotiating the terms of a complex multi-year earn-out mechanism combining EBITDA and new contract win targets and protections to ensure the calculation properly reflects the performance of the business;
- ensuring flexibility within the terms of the sale so the vendors could continue with their other business interests while remaining engaged in the future activities of this firm;
- negotiating an equity commitment letter and a charge over shares in the Buyer held by its Estonian holding company to provide security for the Buyer’s payment obligations; and
- liaising with appropriate local counsel from our network to obtain appropriate overseas legal advice, including an Estonian legal opinion confirming that the Estonian holding company could validly grant the security.
Throughout the course of the transaction, we also ensured that the sellers understood and managed their risks on the transaction, in particular those relating to completion adjustments, future consideration and their equity in the buyer.
Our impact
The transaction successfully completed in 2023. The founders and original management team retain a significant minority stake and are working alongside the buyer to ensure the business continues to thrive and grow.
