Equity financing meaning

This Checklist This Checklist provides points to weigh up when preparing and seeking sign-off for a company voluntary arrangement (CVA) involving the Pension Protection Fund (PPF). It draws on PPF Guidance Note 5 issued in 2018 (see PPF Guidance Note 5: CVAs). When an employing company (or all participating employers in a last man standing scheme) files a CVA proposal with the court, a PPF assessment period begins. Under section 137 of the Pensions Act 2004, the PPF assumes the pension trustees’ voting entitlement (see Practice Note: The Pension Protection Fund—eligibility and entry). In practice, the PPF will typically cast a vote for or against the proposal rather than refrain. The PPF is consistently focused on avoiding any precedent that might allow pension schemes to be diluted where potential PPF entry could arise in the near future (the PPF observes that this has occurred in numerous prior CVAs). The PPF also anticipates that pension trustees will appoint their financial advisers to produce a report addressing the areas of concern...

In a private equity-backed management or leveraged buyout, the principal documents fall into three main groups: Acquisition documents — these set the terms of the purchase between the seller and the buyer (ie newco) Equity documents — these set the terms of the equity investment and govern the relationship between the investor/s and management Finance documents — these cover the provision of the debt facilities and any related facilities (for example, a revolving credit facility for working capital) Acquisition documents Heads of terms (acquisition) The heads of terms, kept to a short form, provide a high-level summary of the parties’ expectations, shared understanding and agreement on the key terms of the intended acquisition. They are signed at the outset of the deal once the parties have aligned on the principal points and before the investor incurs costs on due diligence and the negotiation of the transaction documents...

STOP PRESS: A major, wide-ranging overhaul of the UK listing framework took effect on 29 July 2024, abolishing the premium and standard listing segments and introducing a unified category for equity shares of commercial companies. That commercial companies category is strongly disclosure-led and sits alongside other listing categories, including the shell companies, secondary listing and closed ended investment fund categories. A new UK Listing Rules sourcebook commenced to deliver these reforms, and the previous Listing Rules sourcebook was withdrawn at the same time. For more detail, see Practice Note: Reform of the UK listing regime—fundamentals for guidance. This Checklist represents the listing regime as it existed before 29 July 2024. A limited company may acquire its own shares if certain conditions set out in the Companies Act 2006 (CA 2006) are satisfied under that statute. This is commonly referred to as a share buyback or a purchase of own shares. In addition to the provisions of the CA 2006, further rules and guidelines are relevant to a listed company...

Market Standards Trend Report—Trends in UK public M&A in Q1 2024 Background and approach Market Standards has undertaken analysis to identify prevailing patterns in UK public M&A. This update draws on the Market Standards transaction data analysis tool, which enables users to access, analyse and compare the distinctive features of numerous corporate transactions. It follows our Market Standards Trend Report—Trends in UK public M&A in 2023, in which we assessed firm and possible offers announced in 2023. For this iteration, we reviewed activity from 1 January 2024 to 31 March 2024 (Q1 2024). While we have set these findings alongside the preceding quarter (1 October 2023 to 31 December 2023) and the equivalent period in 2023 (1 January 2023 to 31 March 2023), firm conclusions will only be possible once the 2024 full-year trend report is complete. In total, we considered 31 transactions within the scope of the Takeover Code (the Code): 13 firm offers (9 involving Main Market companies and 4 involving AIM companies), together with...

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Judge James Picken, sitting in the High Court, determined that VietJet Aviation Joint Stock Company had entered into a leasing arrangement with FW Aviation (Holdings) 1 Ltd, a FitzWalter Capital unit, for four Airbus aircraft worth US$111m, and did so 'with full knowledge of the nature and terms' of the transaction. He stated that for the structure, a Japanese operating lease with call option, to be workable, the carrier had to make rental payments on time. The airline is 'a sophisticated commercial actor with significant experience in aircraft financing', and it appreciates the rationale for these types of structures, Picken said. He went on to explain that early termination is 'very damaging' to the economic benefits expected by Japanese investors, therefore the termination clause provides for 'a sum compensating those investors for the reduced tax benefit and also a sum to reflect the expected return on the equity investment for the investors'. Judge Picken added that he had applied the legal test from the landmark UK Supreme Court decision in...

For both the investing private equity fund and the target’s leadership, the prime lure of a private equity-backed buyout is the chance to crystallise a meaningful gain on exit. There are several potential paths to exit from such an investment, most typically: a trade sale to another company operating within the same sector, a flotation (IPO), or a secondary buyout (SBO). The ultimate route will hinge on considerations such as public market appetite for a listing and whether credible purchasers are available. Management often influence the decision, and may favour renewed private equity support via an SBO when the business model and prevailing market backdrop align. A secondary buyout (SBO) is, in essence, a private equity-backed acquisition of a company that has already undergone a private equity-backed buyout. In an SBO, the existing private equity owner exits its stake, though the current management team can remain in post afterwards. Alternatively, fresh management might be appointed, or a blend of old and new...

STOP PRESS: A major overhaul of the UK listings regime took effect on 29 July 2024, scrapping both the premium and the standard listing segments and replacing them with a single category for equity shares in commercial companies. That commercial companies category is heavily disclosure-led and sits alongside other listing categories, including the shell companies category, the secondary listing category and the closed ended investment fund category, among others. A new UK Listing Rules sourcebook came into force to deliver these changes, and the previous Listing Rules sourcebook was revoked. For further information and detail, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the regime as it existed prior to 29 July 2024. A limited company may buy back shares in itself, provided conditions set out in the Companies Act 2006 (CA 2006) are satisfied, where applicable. This is known as a share buyback or a purchase of own shares. In addition to CA 2006, there are other rules and guidelines that are relevant...

This Practice Note forms part of the Lexis+® UK Corporate private equity buyout transaction toolkit. Beyond choosing between a share sale and an asset sale structure, a range of matters should be weighed at the outset of a private equity buyout (MBO), before due diligence begins and the principal transaction documents are negotiated. These matters can influence the core commercial and legal terms, so each side is well advised to address them before settling any headline terms (and before executing heads of terms for both the acquisition and equity elements) and before fixing the transaction timetable. The topics outlined below (and in the Practice Notes referenced in this sub‑phase) may remain relevant throughout the deal, particularly during negotiation of the formal documentation, but they are highlighted early because lawyers for all interested parties ought to consider them and brief their clients as soon as possible. Corporate issues to consider Selected corporate law points are outlined below; applicability will vary with the nature of the deal and the parties...

Insert the following as new definitions (if not already included) in the subscription and shareholders’ agreement or investment agreement of the relevant company: Annual Budget • means the yearly operating budget approved under clause [ insert number of clause in the subscription and shareholders’ agreement/investment agreement dealing with the adoption of the company’s budget ]; A Ordinary Shares • means the A ordinary shares of [ insert amount ]p each in the capital of the Company; [ Financing Documents • means the facilities agreement to be executed on the same date as this Agreement between the [ Company OR [ insert the name of the company in the investee group party to the financing arrangements, eg newco 1, newco 2 etc ] ] and [ insert name of bank ] together with the [ list other financing documents, such as security and intercreditor documentation ] in the agreed form, as amended, supplemented, novated or replaced from time to time; ] Investor Consent or Investor...

Insert the following as new definitions (if not already included) in the articles of association of the relevant company: Definitions include: Bad Leaver; Good Leaver (loss of subsidiary status, death, Investor‑assessed incapacity, or retirement at normal age); Garden Leave; Employee Trust (s.86 IHTA 1984); Fair Value (Art 1.6); Family Member/Trust; Financing Documents; Independent Expert; Issue Price; Leaver and related terms. Insert the following as a new article in the company’s articles of association: 1 Leavers Applies to Leavers and Leaver’s Shares. Within one year of Leaving Date Investor may require the Company to issue a Sale Notice offering Shares to recipients (including the Company/Employee Trust). The Leaver must complete transfer at the Sale Price within five Business Days. On default the Company may execute and register transfers or cancel its purchase; once effected it is final. Good Leavers receive Fair Value; Bad Leavers the lower of Issue/acquisition price and Fair Value. Fair Value is agreed with Investor Consent within 10 Business Days or determined by an Independent...

This Agreement is entered into on [ date ] between: [ insert name of company in which the shares are held ], a company incorporated in England and Wales under number [ insert company number ], whose registered office is at [ insert address ], with brief particulars set out in Schedule 1 (the Company); and The several persons whose names and addresses appear in Schedule 2 (each an Original Shareholder and, together, the Original Shareholders). [Each of the Company and the Shareholders is a Party and, together, the Company and the Shareholders (including the Original Shareholders) are the Parties.] background The Shareholders are the sole shareholders of the Company and have agreed with the Company and with each other to exercise their rights concerning the Company in accordance with this Agreement...