Cross border syndication and the involvement of a range of stakeholders, including granting bodies that require specific legislative/administrative criteria to be met, require a range of advisors/stakeholders and an alignment of interests. How are such advisors managed, how are they involved, how can they be remunerated in early stage companies, how are conflicts managed to ensure continued alignment of interests as business becomes increasingly involved in growth across borders?
Having done an MBO, a listing on the main market of the London Stock Exchange and then moved to AIM, purchased 2 companies in the US, set-up business in 7 countries, sold 5 companies, made 8 Angel investments, 2 of which did not survive and licensed 25 technologies to more than 50 companies, these are my lessons:
1. FIND ADVISORS YOU LIKE.
You are going to spend a lot of time together and good people will improve your day-to-day.
2. AIM HIGH.
Find advisors from a higher league.
It helps you look bigger than you may be and gives you access to a higher level of contacts.
3. FOCUS ON WHY YOU NEED AN ADVISOR.
Scope the work clearly and limit both the fees and control.
Can you do some of the work your self?
Listen to their advice and then make your own decision.
CASE 1.
I have done one transaction where the fees exceeded the actual purchase price of the target business. The Term Sheet included a condition that we would cover the legal costs relating to the transaction of the Target company as well as our own. This seemed reasonable as we were acquiring a group of people and it would not have been attractive to them if they had paid the fees themselves.
My legal team was meant to manage this. Instead they let it run beyond the budget and there was little that could be done but pay.
CASE 2.
In one transaction we spent almost 7 nights continuously drafting and re-drafting the same documents in a room with bad food and strong coffee. The fact that no one really got on made it even more tortuous.
I have also worked with a legal team that was fun, disciplined and productive.
David Hulston, 28 January 2011
All material copyright David Hulston Associates Ltd. @davidhulston1
