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Advanced Negotiation Issues in M&ADate:

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PUBLIC COURSES

• Advanced Equity Valuation• Advanced FCA Listing Rules: Latest Updates with DTRs• Advanced Negotiation Issues in Financial Covenants• Advanced Negotiation Issues in M&A• Advanced Private Equity and LBOs Training • Advanced Takeover Code - Current Strategies and Tactics• Bank Valuation• Corporate Finance Masterclass• Corporate Finance Transactions• Directors - The Good, The Bad and The Ugly• Equity & Debt Capital Markets• Effective Business Writing for Corporate Finance• European Term Loan “B”• How to Buy A Business• How to Sell a Business• Intercreditor (&AAL) Issues in Leveraged, Real Estate and

ABL Transactions• Introduction to the Takeover Code• Introduction to the FCA Listing, Disclosure and

Transparency and Prospectus Rules• Joint Ventures - Key Negotiating and Structuring Issues

with Sample Documents• Leveraged Loans in Private Equity and Corporate

Transactions• Listing Rules and Takeover Code - The Fundamentals• Loan Documents and Security Issues• Market Abuse Regulation - Update• Modelling for Disposals• Modelling for Stressed and Distressed Companies• Tax Issues Affecting MBOs

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• Negotiating Heads of Terms (LOI/MOU) & Related Issues• Negotiating Skills in M&A Transactions• Share Capital• Tax Issues in M&A• The Corporate Finance Modelling Masterclass• The M&A course• The Private Equity and MBO Course• The Structuring & Negotiating Mezzanine, PIK, Second

Lien and Unitranche Course• Valuing a Business• Valuing Start Up and Pre IPO Companies• Valuing a Pharmaceutical Company• Valuing a Technology Company• Winning Corporate Finance Business• Due Diligence in Corporate Finance Transactions



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IN-HOUSE COURSES

• Accounting for Business Combinations (M&A)• Advanced Financial Analysis Training• Banks Financial Statement Analysis - Basic• Banks Financial Statement Analysis - Advanced • Debt Finance for SMEs Training• Emerging Market Bank Modelling Valuation• Financial Statement and Analysis: A 3 Day Course• IPO Training• New Market Abuse Regulation for EU• Private Company Sales in the U.S and U.K• Repo and Securities Lending• Restructuring, Turnarounds & Schemes of Arrangement• The Corporate Finance Training Course• The Debt Finance Training Course• Valuing Commodity Companies and Sectors• Secondary Equity Offerings - Structure & Regulation

Update• The AIM Game - How to list an AIM and What Happens

Next• Valuing Emerging Market Companies



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Advanced Equity ValuationDate: 06 Jun 2018, 17 Oct 2018

Location: London Standard Price: £695 + VAT Membership Price: £556 + VAT

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DCF and Multiple Valuation Reminder ■ Reminder of the five steps of DCF valuation ■ Review of trading multiples ■ Discussion of key issues affecting Terminal

Value, WACC and Enterprise Value to Equity reconciliation

Advanced DCF Valuation ■ Fast growing companies and the use of mul-

ti-period terminal value and fade rates • o Two-stage terminal value (grow-

ing annuity followed by a perpetuity growth rate)

■ Valuation of Net Operating Losses (NOLs) ■ Normalised steady-state cash flows to avoid

abnormal terminal value• Use of target RoIC vs. WACC returns

■ Effective and marginal tax rates ■ Mid-year discounting on cash flows ■ Flexible valuation dates

Case study I – Modelling of two-stage terminal value Modelling of NOLs, flexible deal dates and mid-year discounting

Weighted Average Cost of Capital (WACC) ■ Review of capital asset pricing mode (CAPM) ■ How to think about cost of equity for private

companies ■ How betas are derived – regressing compa-

ny and market returns ■ Which beta to choose for company valua-

tion? ■ Why unlever betas? How do we unlever

betas? ■ Use of Damodaran industry betas ■ Optimal capital structure and gearing risk

This training covers the more advanced areas of Equity Valuation. Participants discuss complex issues such as a two-stage terminal value, valuation of net operating losses, WACC for private companies and issues in the reconciliation between enterprise and equity value (associates, non-controlling interests, operating leases, pension deficits).

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to further enhance their understanding of valuation issues:

■ Building up from partially-complete models on real case scenarios

Each participant should bring a laptop to the course.

Case study II – Unlever and relever betas for a food manufacturing company

Enterprise Value to Equity Value Issues

Stock Options Expenses ■ Essentials of stock based compensation

accounting• Expensing to the income statement over

the vesting period ■ Intrinsic value of stock based compensation

• Treasury method of accounting for stock based compensation

■ Restricted stock and performance stock units

■ Multiples adjustments (EV/EBIT)• Fully diluted market capitalisation in EV• EBIT post stock option expense

■ DCF adjustments• Stock option expense to be included in

FCF• Diluted share count to compute equity

Case study III – Analysing the stock options of Linkedin

Non-Controlling Interests and Associates ■ Accounting for NCI ■ NCI valuation

• Book values• Market values• P / E multiples, Price to Book multiples

■ Adjustments of NCI to multiples (EV/EBIT)• Include NCI at market value in EV• EBIT to include both parents and NCI

earnings ■ Adjustments of NCI to DCF

• Deduct NCI at market value from EV to reach Equity

■ Accounting for equity affiliates / associates


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■ Equity affiliates and core, consolidated and total EV

■ Equity affiliate valuation • Book values/Market values/Multiples

■ Adjustments for equity affiliates to DCF and multiples• Depends on definition of EV (core, con-

solidated or total)

Case study IV – AB InBev and subsidiaries’ NCIAB InBev and Grupo Modelo as associate

Operating Leases ■ Differences between operating and financ-

ing / capital leases ■ Fundamentals of operating and financing /

capital lease accounting ■ Moody’s multiple method and present val-

ue of non-cancellable lease arrangements ■ Operating leases adjustments to multiples

• Capitalised operating leases to be added to EV

• Rental expense to be allocated between interest expense and depreciation

■ Operating leases adjustments to DCF• Free cash flow post rental expenses

■ New accouting rules to abolish difference operating vs. finance leases

Case study V – Computing Ryanair and Easyjet adjusted EV/EBIT

Pensions ■ Fundamentals of pension accounting ■ Defined benefit vs. defined contribution

plans ■ Funded vs. unfunded plans ■ Pension deficits and surpluses ■ Pension adjustments to multiples

• Add pension deficit to enterprise value• Only service costs to remain in EBIT

■ Pension adjustments for DCF• Only service cost in EBIT/free cash flow• Deduct pension deficit from EV to equity

Case study VI – Analyse the pension deficit of British Telecom


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Advanced FCA Listing Rules: Latest Updates with DTRsDate: 07 June 2018, 28 Nov 2018


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On 1 January 2018 a number of updates have been made to the Official List Listing Rules to improve and clarify the rules on the eligibility for a Premium Listing, the classification of significant transactions and reverse takeovers. This course examines these changes and covers other significant updates to the Listing Rules and Technical Notes in the last few years, including shareholder protection and sponsor competence.

The course also covers the Market Abuse Regulation, which became applicable to all quoted companies in the UK in 2016 and is expected to remain, in spite of Brexit, until at least 2019 and probably longer. The requirements of the new MAR and the changes this has brought to the UK market abuse regime are examined.

In addition to comprehensive slides, the course documentation includes exercises illustrating the points in the Technical Notes.

2018 changes ■ Clarification of Premium Listing eligibility

• New holding companies• Historic information on 75% of business• Independence requirements • New Technical Note guidance• Other changes

■ Concessionary routes to listing • New route for property companies• Updates to other routes

■ The Class Tests• Disregarding profits test• Adjustment to profits

■ Suspension of listing for reverse takeovers• Removal of rebuttable presumption• Shell companies• Contacts with FCA

Market Abuse Regulation ■ The new MAR regime

• Replacement of Market Abuse Directive• FCA’s approach to MAR

■ Prohibition of market abuse and market manipulation• Definition of inside information• Insider dealing• Unlawful disclosure

■ Disclosure of inside information• Conditions for delaying disclosure• ESMA guidelines on legitimate interests• Notification of delays in disclosure

■ Safe harbours from market abuse ■ New requirements for insider lists ■ Changes in director/PDMR disclosures

• Information required• Closed period restrictions and excep-

tions

FCA’s rules to strengthen shareholder protection ■ Background to new rules

• Issues arising from Bumi, ENRC and oth-er controlled companies

■ Controlling shareholders targeted by new rules

■ Mandatory relationship agreements ■ Enhanced voting rights of minority share-

holders ■ Provisions affecting all companies

• Independent business and guidance• Annual report disclosures• Smaller related party transactions• Changes to Listing Principles• Notifications for breach of ongoing eligi-

bility criteria

Other Listing Rule and guidance issues ■ Sponsors

• Sponsor competence rules• Broadening of “sponsor services”• Smaller related party guidance• Greater responsibility to provide infor-

mation to FCA• On-going identification of conflicts• Guidance on procedures and resourcing

■ Transactions• Other class tests changes and guidance• When supplementary circulars are re-

quired• Updates to circular rules and guidance• Guidance on hostile takeovers and work-

ing capital


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Advanced Negotiation issues in Financial CovenantsDate: 26 Feb 2018, 12 Jun 2018, 24 Sep 2018


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The loan market in Europe has bifurcated into two main approaches to loan documentation; smaller club and bilateral deals on the one hand, which broadly follow the more lender-friendly LMA approach, and larger syndicated TLB-style deals on the other hand which are increasingly influenced by high yield bonds and invariably are structured on a cov-loose or cov-lite basis. These larger deals also include a far more eclectic approach to the key definitions comprising the ratios with many add-backs taken copied from high yield bonds.

This programme covers financial covenants in leveraged loans and real estate deals and includes specific reference and analysis of the covenants, terms and definitions in the LMA Senior Facilities Agreement for Leveraged transactions and LMA Real Estate precedents. The programme uses information from the Debt Explained database, to review the current trends in the market in the larger syndicated (TLB-style) deals which so often include springing leverage covenants and high-yield-bond style covenant packages.

The larger syndicated TLBs also vary in approach depending on whether they apply English law or NY law (for example, the latter do not usually permit overcures or require prepayment of loans from equity cure cash). Direct lenders, which typically use the LMA leverage precedent as a starting point, also tend to adopt a more borrower-friendly approach to the terms in the loan and the financial covenants.

Financial covenants are arguably one of the most heavily negotiated aspects of the Loan Agreement.

Too often; some parties fail to understand the key negotiating issues that really matter, for example they view the financial covenants in isolation rather than appreciating that they must be seen in the context of the particular capital structure. Secondly, too much time is spent on which covenants apply rather than focusing on the key constituents of the key terms in the financial covenant. Finally, many parties fail to appreciate that, even in cov-lite deals, the financial covenants and/or the components of those covenants play an important role as they also affect a wide range of other critical matters in the loan. This usually includes the various “permitted” actions such as debt incurrence (security and guarantees), sponsor payments, cash sweeps, guarantor coverage and grower, scalable and/or builder baskets where these appear.

This course provides a detailed look at commercial aspects of financial covenants and looks under the bonnet at the critical issues that arise in practice. It provides an in-depth look at the covenants as set out in the Loan Market Association precedent together with other covenants that might be used in practice. Reference is made to the Debt Explained loan database which tracks key terms in the larger syndicated TLB market.

Participants will gain an in-depth view of which covenants should be used together with a detailed analysis of the constituents of the covenants and the sponsor friendly add-backs and other sponsor friendly techniques used by borrowers to manipulate the covenants.

The programme will appeal to practitioners involved in leverage, real estate and infrastructure, such as Lawyers, Private Equity professionals, Bankers in Lending (all departments), Corporate financiers, M&A advisors, Debt advisory and Restructuring. Accounting professionals looking to expand their knowledge of this topic will also benefit as many of the issues embrace legal /documentary considerations. The programme adopts a pan-European approach to the topic but the presenter is able to discuss issues relevant in the USA in view of his exposure to those markets.

To derive full benefit from the programme, it is essential that attendees have a basic understanding of the main / headline elements of a Profit and Loss account (Sales, EBITDA, EBIT etc) and a basic understanding of the differences between P&L /Accrual Accounting and Cash accounting. It is emphasised that participants DO NOT require an understanding of IFRS or GAAP.

A short module summarising the key differences between P&L /Accrual Accounting and Cash Accounting is available on request prior to the programme.

The programme will review the draft ECB guidance on leveraged transactions published in November 2016. The course will examine which type of transactions are covered, which lenders are affected, the approach to EBITDA and the potential implications for players in the debt markets.Case Study: Participants will be required to:- (a) calculate how to derive the key elements of the various covenants (b) identify some of the more problematic components in the covenants (c) calculate the various covenants and (d) explain the pros and cons of each of the covenants and why they may be appropriate for one deal but not another. The calculations are relatively simple and are designed to explain the basic principles and reinforce learning.


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Advanced Negotiation issues in Financial CovenantsContinued...

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Introduction - Interaction of capital structure & financial covenants ■ Types of instruments & impact on the finan-

cial covenants ■ What is the purpose of financial covenants ■ Relevance of Capital Structure on Financial

Covenants• Bullet loans• Impact of PIK

■ How the lenders and borrwers approach setting the Financial Covenants

Key financial ratios used by Lenders and typical LMA ratios in leveraged deals ■ Market based financial ratios ■ The four LMA covenants in leveraged deals ■ Leverage ratios (Balance sheet and P&L

ratios)• Total Debt / EBITDA• Senior Debt/ EBITDA

■ Interest coverage ratios• EBITDA / Total interest • EBITDA / Senior Interest• EBITDA / Cash interest• [EBITDA – Maintenance Capex] / Cash

Interest ■ [EBITDA – Capex] / Cash Interest ■ Cash flow cover (DSCR)

• CADS / Total Debt Service• CADS / Senior Debt service

■ Capex covenant• LMA vs Market approach• Carry forward / carry back amounts -

LMA vs Market approach• Add-backs – LMA vs Market

Calculation of EBITDA and Cash flow ■ EBITDA

• Simplistic calculation of EBITDA• Consistency of application (Accounting

changes under IFRS, GAAP etc)• Exceptional items – LMA approach, UK

GAAP vs IFRS• Discontinued Operations – LMA, different

approaches of UK GAAP vs IFRS• Derivative & Financial Instruments - UK

GAAP vs IFRS• Pension Items - UK GAAP vs IFRS

■ Current trends affacting EBITDA (aggressive add-backs)• Anticipated synergies and cost reductions• What are the “typical” requirments for

“anticipated synergies”• Business optimisation expenses• Run-rate EBITDA – how is this calculated

■ Definition of “Cash flow”

• Typical adjustments• Sponsor friendly adjustments• Potential problems with “cash-flow”

Calculation of Debt and Borrowings and Finance Charges ■ “Total [Net] Debt” and “Senior Total [Net]

Debt”• “Borrowings” per the LMA• Simplistic calculation of Net Debt• Example of net debt items• Treatment of PE “Debt” • Vendor Loans – do they matter• Impact of Debt Buybacks and impact on

“Debt”• Treatment of “trapped” cash on Debt • What does “senior” only exclude?• What about PIK loans – should they be in-

cluded in Total Debt? ■ “Borrowings”

• Treatment of receivables• Redeemable shares• “Sweeper” clause

■ Finance charges & Net Finance Charges• Impact of “PIK” • Hedging impact

Finance Leases v Operating Leases – problem areas ■ Current approach ■ Impact of proposed changes to IFRS ■ Which sectors will be affacted by the changes ■ Potential problem areas (& solutions) with the

new regieme ■ Sectors posing particlar problems with operat-

ing leases

Current market trends ■ Key differences between large vs mid cap vs

smaller deals ■ Cov-lose

• Use and application• Typical ratios

■ Cov-lite• Use and application• Typical ratios

■ Springing Leverage covenants• When should the ratio spring• Calculating the constituents of the cove-

nants• When is the covenant tested• Potential problem areas

Application and compliance with the Financial Covenants ■ How many covenants are needed ■ Which companies should be included

• Definition of “Group”






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• Adjusted EBITDA (effect of acquisitions & disposals)

■ Dealing with “short” periods (i.e. less than 12 months post the deal)• Periods shorter than 12 months• Typical pitfalls to avoid

■ Frequency of application: When should the ratios be tested • Historic TTM/LTM, forecast, both (quarter-

ly, monthly)• 2 options per LMA

■ What level of “Headroom” is appropriate• What’s market• When and why does headroom matter

■ Impact of Clean-ups ■ The Compliance Certificate

• Typical requirements per LMA Sch 9 • Current commercial requirements• Traps for borrwers• When does the breach occur• Ramifications of the breach for Lender

(traps to avoid)

Equity cures ■ Equity cures - What are they, good or bad ■ What should be cured (EBITDA, Cashflow,

Debt) ■ Treatment of “overcures” ■ Is the cure EBITDA? And if yes what effect

will this have ■ How should the cash be used? (Why repay-

ment of debt is not appropriate) ■ Deemed cures – what are they and are they

worth having? ■ Review of recent lessons from Ideal Stand-

ard

Covenants used in Real Estate deals ■ The LMA financial covenants ■ Interest cover – constituents, pros and cons

• Historical • Projected

■ Key differences from the leveraged ratio• Calculation periods• “Passing Rental” – what is included and

what is excluded• Difficult / contentious aspects - break

clauses, non-rental income, costs/ex-penses

• “Finance costs” – treatment of hedging ■ Loan to Value

• Constituents, pros and cons• Items to be netted off

Impact of the Financial Covenants on other aspects of the loan facility ■ Aspects of the loan affected by Leverage

test• Margin ratchets• Cash sweeps• Debt incurrence (Incremental/Accordion

facilities) ■ Aspects of the loan affected by the defintion

of EBITDA• Material subsidiaries and their relvance• Guarantor coverage test

■ Impact and relevance on Grower, Sclable and Builder baskets• Key differences• Impact on and relevance to the loan facility

Draft ECB Guidance on Leveraged Transactions ■ Which lenders are affected ■ Which deals are affected ■ EBITDA calculation ■ Ramifications for market players

Appendices (Not covered in the course but included in an appendix the materials)

Overview of ratios used in Project finance / Infrastructure ■ Annual Debt Service Coverage ratio (“AD-

SCR”) ■ Loan/Bond Life cover ■ Project Life cover ■ Using the Buffer test





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Advanced Negotiation Issues in M&ADate: 24 May 2018, 17 Sept 2018, 29 Oct 2018

Location: London Standard Price: £795 + VATMembership Price: £636 + VAT

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Course Overview

This programme is aimed at those with a working knowledge of the M&A process. It focuses on negotiating the key commercial aspects of the transaction which impact value for both buyer and seller and on creating the right framework and strategy for enhancing value to the seller or retaining value for the buyer.

The simplistic view of M&A is that it is a bilateral process between buyers and sellers. Experienced practitioners understand it is an organic process, which involves multilateral negotiations between buyers/sellers on the one hand, and their respective advisers on the other hand. Additionally, there are critical negotiating issues that arise, in parallel, between the parties, their own advisers and between the advisors themselves (e.g. accountants debating the completion accounts, lawyers debating warranties in the SPA). To complicate matters, there are significant differences in approach between different types of sellers and buyers. For example corporates have a different agenda to PE firms whilst owner/managers, who invariably lack experience in M&A, often represent the biggest challenge. Last, the seller’s management can also have a malign influence on the sale process which requires delicate handling.

The programme is divided into two parts. The first part focuses on the soft negotiating issues which are common to smaller deals but less relevant in larger auctions. The second part focuses on the technical or commercial aspects where the real value can be gained or lost. These include the completion mechanisms (completion accounts and locked box), the offer structure (e.g. cash free-debt free and working capital adjustment), structuring the consideration, handling management and value leakage through the warranties, disclosure and indemnities.

Finally, warranty insurance, long seen as an expensive and cosmetic solution, is experiencing rapid acceptance in Europe and, increasingly, has emerged as a powerful negotiating tool. Last, the programme reviews various solutions to closing the “value gap” between the parties and the pros and cons of the various methods of achieving this.

Please note that this course covers some aspects that are also covered on the Sale & Purchase Agreements course although the focus in this programme is on commercial aspects as opposed to a more legalistic approach in the SPA course.

General guidelines for effective negotiating ■ 5 Key issues everyone should remember in

negotiating M&A ■ Why price isn’t everything (10 aspects af-

fecting the value) ■ The value matrix – building blocks of the

price ■ Reconciling price vs. value (strategy) –

what to look for ■ Three step approach to focus the negotia-

tions & avoid being side-tracked ■ The art of making concessions … how and

why they can help ■ 8 common mistakes in negotiating the deal

(& how to avoid them)

Specific matters re U.S. deals ■ Jurisdiction does matter (U.S. is a Federal

System)

■ Heads / LOI– different approaches in NY vs Delaware (good faith)

■ Different aproaches to Reps & Warranties ■ Different aproaches to Disclosure

Issues to consider with a Chinese buyer ■ Government & Regulatory issues ■ Cultural matters ■ Start small ■ Post Merger issues

Tactics for managing the advisors in the deal ■ Managing and choosing your advisors ■ Tips for handling your lawyers (and theirs) ■ Getting the best from the accountants ■ Managing the other party’s advisors

Managing the buyer and the sellers ■ Key differences in approach between corporate

buyers and PE firms ■ The “duty to negotiate in good faith”


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Advanced Negotiation Issues in M&AContinued

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• What it means in Europe and civil juris-dictions

• Key risk areas & how to mitigate them• Position in the UK (it’s not a liar’s char-

ter) ■ Buying from corporate sellers

• The agency cost issue & how it affects the deal

• Who is really running the deal? ■ Dealing with owner/ managers

• The psychology of buying from owner/managers

• How to overcome problems with (inex-perienced) advisors/lawyers

• How to differentiate your offer ... & close the deal

• Dealing with multiple sellers• Specific problems when buying minori-

ty/majority stakes

Managing conflicts with managers (who are not the owners) ■ Identifying the two major potential areas

of conflict and value erosion ■ Hijacking or sabotaging the deal – the 3

scenarios and strategies for managing them• Sweetheart deals - “typical” terms• Problem areas and how to mitigate

them (in advance)• Other strategies for handing recalcitrant

management ■ Managing the flow of information

• Interaction with seller liability?• Reverse warranties & side letters – do

they work?• Tactics for minimising seller’s risk

Structuring the Offer – impact on value & price ■ The basic Offer structure – cash free, debt

free & working capital/net asset value ad-justment

■ Analysis of the five key value drivers / are-as for due diligence & value• Cash, debt, working capital, capex and

EBITDA/cash run rate ■ Problematic areas and how to extract value

• The “trapped cash” problem• What is “debt”?

“Working capital” – why and how it matters ■ Two different approaches to completion:

Locked box vs Completion Accounts• How they can add / destroy value• When to use them and when to avoid

them – decision tree• Key areas for negotiation

CASE: Identifying the key aspects affecting the reconciliation from Enterprise to Equity Value; techniques for estimating average and normalised working capital

Value Leakage: Reps, Warranties, Disclosure & Indemnities ■ Reps and warranties – what’s the difference &

why it matters? ■ Warranties - what are the main areas of risk ■ Disclosure – general tactics

• Dangers of too aggressive disclosure• Using disclosure to identify / mitigate risk

■ Indemnities - caps and collars ■ Tactics for limiting liability and value leakage

• Survival / time to assert claims & carve-outs

• Liability caps / baskets, de minimis & de maximis

Warranty Insurance … a powerful negotiating tool ■ Rapid evolution of the market in Europe ■ Seller vs buyer policies – key differences, pric-

ing and typical terms ■ Interaction with the warranties ■ How buy-side policies can help the seller ■ Where sell-side policies can provide leverage

Bridging the “Value Gap” on price ■ Cash - how much cash is too much? ■ Shares (listed)

• Use and application• Problems areas: market price, caps & col-

lars• Other pitfalls & how to avoid them

■ Vendor loans• Use and application• Pros and cons for sellers and buyers

■ Contingent value rights … undervalued tool ■ Stub equity – when to use it and why ■ Anti-embarrassment ... what is reasonable? ■ Consultancy agreements - Where and how

they can help ■ Earn-outs – a tool for value arbitrage

• Anatomy of an earn-out• Key negotiation issues• Typical pitfalls for buyer• Typical pitfalls for seller

CASE: Identifying the key issues in a tricky disposal, discussing how best to negotiate these with the other side and deriving the optimum deal structure in order to resolve the key issues to the benefit of both buyer & seller


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Advanced Private Equity & Leveraged Buy-outsDate: 05-07 Feb 2018, 25-27 Jun 2018, 12-14 Nov 2018

Location: London Standard Price: £1,800 + VATMembership Price: £1,440 + VAT

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Course Overview

The programme will review the impact of the draft ECB guidance on leveraged transactions.

This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue

Day 1

Introduction to Private Equity: The PE value creation model; PE fund structures

Introduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs USA• Financial assistance • Ranking & priority of senior vs junior debt

& pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an appro-priate financial structure (overview)• Percentage senior, junior and equity in debt

capital structure• EBITDA multiples• Target returns for Private Equity & mezza-

nine funds ■ Deriving the funding structure

• Funding uses • Funding sources


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Advanced Private Equity & Leveraged Buy-outsContinued

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Structure and key terms and trends for PE funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How Private Equity fund structures optimise

value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation can

boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Completion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the

correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit ■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management

Adding value: operating partner models ■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing returns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary deals

■ Equity ratchets • Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employee, shareholder, warrantor

■ Key documents & terms




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Advanced Private Equity & Leveraged Buy-outsContinued

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• Shareholders’ agreement vs articles/ stat-ues (pros & cons)

■ Critical issues in the investment agreement • Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why

“fair value” is dangerous)• Transfer issues – drag, tag-along rights

■ Critical issues in the service agreement• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for bor-

rowers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference

(maintenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they ap-

peal to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and impact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s ob-

jective ■ Step 2: Identifying the key requirements for

the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds

■ When and where to use junior debt ■ Step 4: Strategies for negotiating with lend-

ers ■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management




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Advanced Takeover CodeDate: 27 Ap 2018, 8 Nov 2018


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Course Overview

This course covers key rules in the Takeover Code regulating takeovers and the bid strategies and tactics that are used in the current marketplace.

The tactical advantage that possible bidders have had in takeovers has changed since the Code Review and the course examines the numerous effects this has had on bidder and target strategies.

Participants will learn how takeovers are conducted from the initial stages to the completion or lapsing of the bid and will gain an understanding of which strategies and tactics have and which have not worked, with examples from many recent deals.

The Takeover Code: Conduct of Offer ■ The UK takeover framework ■ Legal, UKLA and Code provisions

Key rules for the conduct of public bids ■ Announcements

• When possible/firm offer announcements are required

• Advisers’ responsibilities for announce-ments

• What is an untoward share price move-ment?

• Disclosures following announcements• Naming and Put Up or Shut Up• Contents of firm offer

■ Conditions/pre-conditions• When can they be subjective?• When can they be invoked?• What pre-conditions are possible in firm

offer announcements? ■ Minimum consideration following market

purchases ■ Restrictions

• No special deals • Management incentivisation in PTPs• Frustrating actions and exceptions

■ Squeeze out requirements ■ Overview of recent changes to rules ■ Types of takeover

• Offer statistics• Contractual offer timetable• How hostile offers are played out• Timetables in competitive situations• Development of Schemes of Arrangement• The rules for Schemes and timetable• Mandatory offer and whitewash require-

ments and uses• Partial and tender offers – rules and

when they are useful

Public Takeovers: Strategies and Tactics ■ Changes in marketplace which have affected

takeoversBidder Strategies and Tactics ■ Buying share stakes in Target

• Advantages of buying share stakes before and during bid

• Risks of buying stakes• Restrictions on stake-buying and regulatory

requirements • Methods of acquiring stakes• Is it worth holding a large minority stake?

■ Irrevocable undertakings• Advantages of holding irrevocables• Attitude of shareholders• Hard and soft irrevocables• Non-binding letters of intent

■ Impact of Code changes• Return to traditional bid approach• Effect of 28 day PUSU and naming• Work which needs to be done before ap-

proach• Friendly negotiations or hostile offer?• Possible offers and bear hugs

■ Timing considerations of firm offer announce-ments and bid • Issues if US shareholders are present

■ Structure: Scheme of Arrangements or Offer• Advantages and disadvantages compared to

contractual offer• Examples of Schemes/offers meeting share-

holder opposition• Examples of Schemes in competitive situa-

tions ■ Cash or share offer?

• Advantages/disadvantages of cash and shares

• Different mixes of consideration• Cash alternative structures• Other financing structures• Means of using foreign shares


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Advanced Takeover CodeContinued

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■ Care with statements• Price and other future actions• Post-offer undertakings

■ Concluding the offer• When to increase offer• Are no increase / no extension state-

ments useful?

Target Strategies and Tactics ■ Basic arguments for defence ■ Directors and advisers’ responsibilities

in accepting/rejecting an offer ■ Measures before a bid

• Keeping close to market• Identification of stakes• Position of pension fund

■ Negotiate, open books or make possible offer announcement?• Effects of a possible offer announcement

and timing• Advantages of an auction• When should Target refuse to talk?• When to open up books?

■ Forecasts and undertakings• Profit/dividend forecasts• Restructuring and valuations• Share buy-backs and special dividends• What works best?

■ Pleadings ■ Anti-trust ■ White knight/squire ■ Bolster the board ■ “Get them before they get you”

Both Sides’ Strategies and Tactics ■ Conflicts of interest ■ Examining documents/statements ■ Financial and managerial arguments ■ Direct approach to shareholders/analysts

WHAT OUR CLIENTS ARE SAYING ABOUT THE COURSE:

“The trainer had a good knowledge of the code

& how the various takeovers have been implemented”

“The best aspect of the course has been the chance of having an experienced

professional as a trainer.”

“Good first-hand experience, practical real life examples & updates

of recent rules”

“The trainer had years of experience giving excellent overview of the code”

“Lead by an experienced market practitioner. Very interesting to hear deal experience of other

participants too”


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Bank ValuationDate: 18 -19 June 2018, 25-26 Oct 2018


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Course Objectives

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to:

Review the accounting and valuation of banks’ financial statements including the loan book, financial instruments and deriva-tives used for hedging purposes;

Further advance participants’ understanding of the latest Basel III developments including MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR);

Understanding the key metrics to value a bank, including performing all the steps of a Dividend Discount Model (DDM) and Multiples Analysis using Excel.

Course Overview

Day 1

Session 1

The aim of this session is to provide participants with an understanding of the financial statements of a bank. The focus is on the banking book and financial instruments. The reporting and valuation of derivatives is also discussed. ■ Banks’ financial statements overview ■ Accounting for loans

• Non-performing loans • Understanding impairments vs. write-off • Incurred losses (IAS 39) has been re-

placed by expected losses (IFRS 9) ■ Accounting for financial instruments

• Lastest IFRS 9 implications: Amortised cost, FVTPL and FVTOCI

• Level 1, 2 and 3 valuations • Impairments of financial instruments

■ Accounting for derivatives • Hedge accounting: fair value, cash flow

and net investment • Netting derivative assets and liabilities

Case study: Barclays Financial Statements

Session 2 Fundamentals of Regulatory Capital Throughout this module, participants review the current regulatory requirements, in particular Tier I and Tier II capital ratios and understand detailed computations. ■ Overview of regulatory framework ■ Overview of Basel I, II and III and latest

Basel IV updates ■ Overview of calculating available and re-

quired capital• Common Equity Tier 1 (CET1), Tier 1,

Tier 2 and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, deferred tax, changes to investment portfolio, etc.

■ Overview of calculating risk weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk with the latest Basel IV requirements

- Standardised floor of 72.5% based on standardized approach - Simultaneous reduction in standardised risk weights for low risk mortgage loans ■ Overview of key capital, liquidity and funding

ratios• Tier 1 and total capital ratios• Leverage ratios• Liquidity coverage ratios (LCR) and Net

stable funding ratios (NSFR)

Case study: Barclays Regulatory Ratios Review

Day Two Session 3 Forecasting and Modelling Banks Based on the financial statements and publicly available regulatory information of Barclays, participants forecast its financial performance based on its historical statements. ■ Modelling and forecasting the balance sheet:

deposit or loan-driven? ■ The loan and trading book ■ Funing requirements and mix: deposit vs.

wholesale funding ■ Growth in funds under management ■ Modelling and forecasting the income state-

ment

This training allows participants to build a structured approach to the analysis and valuation of banks. Specifically, through a mix of lecture, case studies and Excel modelling of Barclays, the workshop will equip participants to: ■ Review the accounting and valuation of banks’ financial statements including the loan book,

financial instruments and derivatives used for hedging purposes; ■ Further advance participants’ understanding of the latest Basel III developments including

MREL, counterparty credit risk and the latest leverage and liquidity ratios (LCR and NSFR); ■ Understanding the key metrics to value a bank, including performing all the steps of a Dividend

Discount Model (DDM) and Multiples Analysis using Excel.


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Bank ValuationContinued

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■ Understanding the income statement drivers ■ Net interest income and margin ■ Non-interest income ■ Forecasting loan impairment through the

credit cycle ■ Operating costs ■ Tax ■ Modelling and forecasting regulatory capital ■ Risk weighted assets ■ Required and available capital under Basel I,

II or III ■ Liquidity requirements and stable funding

requirements ■ Forecasting dividends (payout ratio and/or

minimum capital requirement) ■ Ratio analysis and key performance ratios

Case study: Financial Modelling of Barclays on Excel

Session 4 Bank Valuation Following the forecasting of the bank’s performance, this session focuses on the Dividend Discount Model (“DDM”) and key multiples of Barclays. ■ Free cash flow to equity mode ■ Present value of future dividends ■ Cost of equity for banks ■ Terminal value: review of potential ap-

proaches (key parameters or RoE) ■ Sensitivity analysis ■ Banking trading multiple

• P/BV and adjustment to BV explained• P/E, dividend yield

Case study: DDM and Multiples of Barclays on Excel


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Corporate Finance MasterclassDate: 04-06 Jun 2018, 15-17 Oct 2018

Location: London Standard Price: £1,995 + VAT Membership Price: £1,596 + VAT

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Course Overview

This programme has been designed to develop the participants’ understanding of Corporate Finance gradually over a three-day period. Participants are welcome to attend all or part of the gradual steps of the training depending on their business needs. Day 1 – Corporate Finance Transactions During the first day, participants are introduced to the main transactions in Corporate Finance: Mergers & Acquisitions (M&A), including buy-side and sell-side transactions, equity and debt financing and Leveraged Buy-Out (LBO). The steps in an M&A process are explained in detail alongside due diligence and synergies. Key metrics in M&A analysis, including accretion/dilution, pro forma leverage, synergies paid away are discussed based on real life case studies. Participants then learn the key characteristics and players of an LBO and go through its financing structures. Day 2 - Equity & Debt Capital Markets Participants start by covering the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation. Finally, participants will cover the main debt products available to corporates. The bond issuance process and key documentation are discussed. Both long and short term, and public and private financing options are explained. Day 3 – Advanced Equity Valuation Methodologies Following the initial valuation methodologies, participants will move, during the second day, to more advanced business valuation concepts. Participants will discuss complex issues such as a two-stage terminal value, valuation of net operating losses, WACC for private companies and issues in the reconciliation between enterprise and equity value (associates, noncontrolling interests, operating leases, pension deficits). Much of the course work involves Excel modelling and analysis, equipping participants with the tools to further enhance their understanding of valuation issues: ■ Building up from partially-complete models on real case scenarios

Each participant should bring a laptop to the course to facilitate modelling work.

DAY ONE Corporate Finance Transactions ■ Review of main Corporate Finance

transactions • Buy-side and Disposals • Fairness opinions • Leveraged Buy-Out (LBO)/Management

Buy-Out (MBO) • Initial Public Offering (IPO) and second-

ary issuance • Debt financing

■ Advisers and their roles Mergers & Acquisitions ■ M&A trends: volume, industries, actors in the

US, Europe and China ■ Buy-side and sell-side ■ Type of transactions

• Auction/Competitive process/Bilateral ne-gotiation

■ Timetable and process ■ Due Diligence

• Due diligence as deal breaker or deal ad-justers

• Private vs. listed companies


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Corporate Finance Masterclass BOOK NOW

■ Synergies • Types of synergies: cost and revenues • Phasing and initial restructuring costs

■ Basic documentation review • Letter of intent • Key clauses of sale and purchase agree-

ment Case Study I: Participants anlayse existing M&A transactions in the steel and industrial sectors

M&A Financial Analysis ■ Review of key financial metrics in M&A

• EPS accretion/dilution • Ownership dilution • RoIC vs. WACC • Pro forma leverage • Net present value of synergies vs. con-

trol premium ■ Calculating goodwill ■ Dealing with fair value adjustments to the

target’s net assets ■ Refinancing of target’s debt ■ Fees (advisory, debt-issuance and equi-

ty-issuance) ■ Identifying the maximum offer price and a

suitable financing mix Case Study II: Participants analyse the acquisition of a food manufacturer on Excel

Leveraged Buy-Out (LBO) ■ LBO trends: volume, industries, actors in

the US, Europe and China ■ General overview of a levered transaction:

basic principles ■ Drivers of value creation in a levered trans-

action • How leverage increases the return on

equity • What makes a good LBO candidate

■ The concept of cash flow lending • The lender’s perspective: risk, return and

exit routes ■ Structural subordination ■ Financial instruments used in levered trans-

actions • Senior debt (revolving facility, term A,

term B, term C) • Second lien • Mezzanine loans • High yield bonds and PIK notes • Preferred shares, shareholder loans,

vendor loan notes Case Study III: Participants perform the LBO of a cloud computing company

DAY TWO Capital Markets Fundamentals ■ What financial markets do? ■ Who are the major players? ■ Domestic and international capital markets ■ Debt versus equity ■ Primary versus secondary market ■ Distinguishing between retail, corporate

and investment banking ■ Buy side versus sell side ■ League tables, equity & debt underwriting ■ Loan and bond markets ■ Corporate advice and finance ■ Where transactions take place: Exchanges

vs. OTC vs. ECNs ■ The buy-side industry/investors ■ Active vs. passive investment management ■ Asset allocation

Equity Capital Markets ■ ECM and IPO trends: volume, industries,

actors in the US, Europe and China ■ The corporate lifecycle and equity financing

options ■ ECM role and fees ■ Initial public offering

• Process • Prospectus • Book building and arriving at a price • Quiet period • Stabilization and greenshoe option

■ IPO modelling with pre and post offering ■ Secondary offering

• Follow on placements • Right issues • Accelerated book building • Modeling a follow on placement

■ Share classes • Different classes • Preference shares • Pricing • Issuing shares in different markets • Modelling different classes of shares

■ Listing rules • Key rules in main equity markets • Minority squeeze out • Compulsory purchase

Debt Capital Markets ■ The corporate lifecycle and debt financing

options ■ Bond issuance process

• Due diligence• Prospectus • Roadshow • Syndicate and bond allocation• Market making and after-market

■ Short-term debt funding • Overdraft/ Revolving credit facility/Com-

mercial paper






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Corporate Finance MasterclassContinued...

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■ Long- term debt funding • Bank debt • Publicly issued bonds

Case Study II: Participants analyse the recent apple bond issuance, term sheet and prospectus DAY THREE DCF and Multiple Valuation Reminder ■ Reminder of the five steps of DCF valuation ■ Review of trading multiples ■ Discussion of key issues affecting Terminal

Value, WACC and Enterprise Value to Equity reconciliation

Advanced DCF Valuation ■ Fast growing companies and the use of mul-

ti-period terminal value and fade rates • Two-stage terminal value (growing annui-

ty followed by a perpetuity growth rate) ■ Valuation of Net Operating Losses (NOLs) ■ Normalised steady-state cash flows to avoid

abnormal terminal value • Use of target RoIC vs. WACC returns

■ Effective and marginal tax rates ■ Mid-year discounting on cash flows ■ Flexible valuation dates

Case study I – Modelling of two-stage terminal value - Modelling of NOLs, flexible deal dates and mid-year discounting Weighted Average Cost of Capital (WACC) ■ Review of capital asset pricing mode (CAPM) ■ How to think about cost of equity for private

companies ■ How betas are derived – regressing compa-

ny and market returns ■ Which beta to choose for company valua-

tion? ■ Why unlever betas? How do we unlever be-

tas? ■ Use of Damodaran industry betas ■ Optimal capital structure and gearing risk

Case study II – Unlever and relever betas for a food manufacturing company Enterprise Value to Equity Value Issues Stock Options Expenses ■ Essentials of stock based compensation ac-

counting • Expensing to the income statement over

the vesting period ■ Intrinsic value of stock based compensation

• Treasury method of accounting for stock based compensation

■ Restricted stock and performance stock units ■ Multiples adjustments (EV/EBIT)

• Fully diluted market capitalisation in EV• EBIT post stock option expense

■ DCF adjustments • Stock option expense to be included in FCF • Diluted share count to compute equity

Case study III – Analysing the stock options of Linkedin

Non-Controlling Interests and Associates ■ Accounting for NCI ■ NCI valuation

• Book values • Market values • P / E multiples, Price to Book multiples

■ Adjustments of NCI to multiples (EV/EBIT) • Include NCI at market value in EV • EBIT to include both parents and NCI earn-

ings ■ Adjustments of NCI to DCF

• Deduct NCI at market value from EV to reach Equity

■ Accounting for equity affiliates / associates ■ Equity affiliates and core, consolidated and

total EV ■ Equity affiliate valuation

• Book values/Market values/Multiples ■ Adjustments for equity affiliates to DCF and

multiples • Depends on definition of EV (core, consoli-

dated or total)

Case study IV – AB InBev and subsidiaries’ NCI AB InBev and Grupo Modelo as associate

Operating Leases ■ Differences between operating and financing /

capital leases ■ Fundamentals of operating and financing /

capital lease accounting ■ Moody’s multiple method and present value of

non-cancellable lease arrangements ■ Operating leases adjustments to multiples

• Capitalised operating leases to be added to EV

• Rental expense to be allocated between interest expense and depreciation

■ Operating leases adjustments to DCF • Free cash flow post rental expenses

■ New accouting rules to abolish difference op-erating vs. finance leases

Case study V – Computing Ryanair and Easyjet adjusted EV/EBIT






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Corporate Finance MasterclassContinued...

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Pensions ■ Fundamentals of pension accounting ■ Defined benefit vs. defined contribution

plans ■ Funded vs. unfunded plans ■ Pension deficits and surpluses ■ Pension adjustments to multiples

• Add pension deficit to enterprise value • Only service costs to remain in EBIT

■ Pension adjustments for DCF • Only service cost in EBIT/free cash

flow • Deduct pension deficit from EV to eq-

uity Case study VI – Analyse the pension deficit of British Telecom





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Corporate Finance TransactionsDate: 04 Jun 2018, 15 Oct 2018


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Course Overview

The participants are introduced to the main transactions in Corporate Finance: Mergers & Acquisitions (M&A), including buy-side and sell-side transactions, equity and debt financing and Leveraged Buy-Out (LBO).

The steps in an M&A process are explained in detail alongside due diligence and synergies. Key metrics in M&A analysis, including accretion/dilution, pro forma leverage, synergies paid away are discussed based on real life case studies. Participants then learn the key characteristics and players of an LBO and go through its financing structures.

Section 1 – Corporate Finance Transactions ■ Review of main Corporate Finance transac-

tions • Buy-side and Disposals • Fairness opinions • Leveraged Buy-Out (LBO)/Management

Buy-Out (MBO) • Initial Public Offering (IPO) and secondary

issuance • Debt financing

■ Advisers and their roles Section 2 – Mergers & Acquisitions ■ M&A trends: volume, industries, actors in

the US, Europe and China ■ Buy-side and sell-side ■ Type of transactions

• Auction/Competitive process/Bilateral negotiation

■ Timetable and process ■ Due Diligence

• Due diligence as deal breaker or deal adjusters

• Private vs. listed companies ■ Synergies

• Types of synergies: cost and revenues • Phasing and initial restructuring costs

■ Basic documentation review • Letter of intent • Key clauses of sale and purchase agree-

ment

Case Study I: Participants anlayse existing M&A transactions in the steel and industrial sectors

Section 3 – M&A Financial Analysis ■ Review of key financial metrics in M&A

• EPS accretion/dilution • Ownership dilution • RoIC vs. WACC • Pro forma leverage • Net present value of synergies vs. control

premium ■ Calculating goodwill ■ Dealing with fair value adjustments to the

target's net assets ■ Refinancing of target's debt ■ Fees (advisory, debt-issuance and equity-issu-

ance) ■ Identifying the maximum offer price and a

suitable financing mix Case Study II: Participants analyse the acquisition of a food manufacturer on Excel

Session 4 – Leveraged Buy-Out (LBO) ■ LBO trends: volume, industries, actors in the

US, Europe and China ■ General overview of a levered transaction:

basic principles ■ Drivers of value creation in a levered transac-

tion • How leverage increases the return on equi-

ty • What makes a good LBO candidate

■ The concept of cash flow lending • The lender’s perspective: risk, return and

exit routes ■ Structural subordination ■ Financial instruments used in levered transac-

tions • Senior debt (revolving facility, term A, term


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Corporate Finance TransactionsContinued...

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• B, term C) • Second lien • Mezzanine loans • High yield bonds and PIK notes • Preferred shares, shareholder loans,

vendor loan notes

Case Study III: Participants perform the LBO of a cloud computing company


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Directors - The Good, The Bad and The Ugly

Date: 14 March 2018Location: London Standard Price: £625 + VAT

Membership: £500 +VAT BOOK NOW

Course Overview

This one-day course in two sessions is aimed at those wishing to develop an understanding of all aspects of being a private company director, from the positives to the warning signs and consequences of difficulties. It will be particularly useful for corporate and litigation lawyers, company secretaries advising directors and directors themselves. The day uses a realistic case study and recent case law examples (such as Dickinson v NAL (2017)) to explore how directors should run private companies and what happens when they get it wrong.

Uniquely, the sessions are run by two different experts to give delegates the benefit of differing perspectives.

Participants will: ■ Be introduced to the Directors duties and how the duties should be considered when making

decisions ■ Have explained to them how to make decisions when a company is in financial difficulty ■ Get to grips with the range of other responsibilities attaching to directors ■ Be introduced to what constitutes “ Unfit” conduct ■ Get an overview of the new Compensation Order regime ■ Have explained to them the new Insolvency Practitioner reporting on directors requirements

and what this means for directors

AM: How should directors make decisions?

This session includes:

■ Board meeting best practice ■ Directors duties:

• the statutory duties explained• other non-statutory duties• transactional vs situational conflicts• how the duties should be considered

when making decisions ■ Active and passive directors’ responsibilities ■ Transactions with directors:

• Substantial property transactions• Loans• Service contracts

■ Dealing with conflicts ■ The range of other responsibilities attaching

to directors, for example:• company accounts• health & safety• employment law• competition law• fraud• bribery

■ What shareholders can do to hold directors to account

■ Possible reliefs and protections for directors

PM: What happens when directors get it wrong?

The most likely outcome is disqualification for ‘unfitness’ in the context of corporate insolvency.

This session explores what unfitness means: who can seek a disqualification order and how directors are prosecuted. In addition, other areas of potential liability for the errant director are considered, notably wrongful trading and misfeasance. We shall also look at proactive steps that can be taken to avoid potential action. The session will include:

■ An analysis of what constitutes “ Unfit” conduct

■ Practice and Procedure in the disqualifica-tion arena:• likely length of disqualification• exceptions• the Insolvency Service approach to en-

forcement ■ Consequences of Disqualification Orders or


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Directors - The Good, The Bad and The UglyContinued...

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Undertakings ■ The new Compensation Order regime:

• what does this mean• difficulties

■ Wrongful trading: • what needs to be proven• recent case law

■ Misfeasance and other breaches of duty ■ Recent case law developments ■ Tips and tactics on how to prevent liability ■ The new Insolvency Practitioner reporting

on directors requirements and what this means for directors.

These areas are particularly topical given recent changes in the whole field of insolvency law (pursuant to the Small Business Enterprise and Employment Act 2015 implementing legislation).





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Equity & Debt Capital MarketsDate: 05 Jun 2018, 16 Oct 2018


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Participants start by covering the main functions and players of capital markets. Participants are then introduced to equity markets and products. We will focus on the life-cycle of equities, starting with the Initial Public Offering and moving afterwards to secondary offerings (rights issues, accelerated book building, bought deals, etc.). We will also look to the secondary market, including motivations of investors. We will drill down on the characteristics of equity and introduce comparable and fundamental equity valuation.

Finally, participants will cover the main debt products available to corporates. The bond issuance process and key documentation are discussed. Both long and short term, and public and private financing options are explained.

Session 1 – Capital Markets Fundamentals ■ What financial markets do? ■ Who are the major players? ■ Domestic and international capital markets ■ Debt versus equity ■ Primary versus secondary market ■ Distinguishing between retail, corporate

and investment banking ■ Buy side versus sell side ■ League tables, equity & debt underwriting ■ Loan and bond markets ■ Corporate advice and finance ■ Where transactions take place: Exchanges

vs. OTC vs. ECNs ■ The buy-side industry/investors ■ Active vs. passive investment management ■ Asset allocation

Session 2 – Equity Capital Markets

■ ECM and IPO trends: volume, industries, actors in the US, Europe and China

■ The corporate lifecycle and equity financing options

■ ECM role and fees ■ Initial public offering ■ Process ■ Prospectus ■ Book building and arriving at a price ■ Quiet period ■ Stabilization and greenshoe option ■ IPO modelling with pre and post offering ■ Secondary offering

• Follow on placements • Right issues • Accelerated book building • Modeling a follow on placement

■ Share classes • Different classes • Preference shares • Pricing

• Issuing shares in different markets • Modelling different classes of shares

■ Listing rules • Key rules in main equity markets • Minority squeeze out • Compulsory purchase

Case Study I: Detailed review of the Facebook IPO

Section 3 – Debt Capital Markets

■ The corporate lifecycle and debt financing options

■ Bond issuance process • Due diligence • Prospectus • Roadshow • Syndicate and bond allocation • Market making and after-market

■ Short-term debt funding • Overdraft/ Revolving credit facility/Com-

mercial paper ■ Long- term debt funding

• Bank debt • Publicly issued bonds

Case Study II: Participants analyse the recent apple bond issuance, term sheet and prospectus


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Effective Business Writing for Corporate FinanceDate: 05 Mar 2018, 19 Sep 2018


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Course DescriptionThis training is focused on acquiring the skills to write an effective business report for Corporate Finance and Mergers & Acquisitions professionals.

Upon completion of this intensive one-day course, participants will be able to: ■ Understand the key sections of a business report; ■ Learn how to juggle with and summarize tons of data; ■ Write a powerful, straight-to-the point business report; ■ Feel more comfortable presenting their findings to a senior audience.

Course Overview

Course Methodology

The course will be delivered in a highly interactive, participative way, involving many activities and exercises, thereby ensuring maximum learning and integration of the learning points into the workplace, when the participants return to their daily roles.

Introduction ■ What are the key skills of business writing? ■ Write with the reader in mind ■ Summarising data in a concise manner ■ Structure and organise your report ■ The “so what?” test

Business Reports ■ What are the different types of business

reports in Corporate Finance? ■ A Corporate Finance marketing presentation ■ An investment appraisal for a private equity

firm ■ An information memorandum on a potential

target ■ A presentation on financing needs for an

acquisition

Case Study I: Several Corporate Finance business reports are presented to participants to identify best practises

■ Key sections• Executive summary• Key trends• Current situation assessment• Analysis of potential solutions/key consid-

erations • Valuation analysis and financing consider-

ations• Conclusion and next steps

Tips for Writing Effective Corporate Finance Reports ■ Report vs. essays

• Focus on the key financing and strategic information through bullet points

• Each bullet needs to make a point and pro-vide a message

• Reader often senior management, board-level

■ Planning & organizing the Corporate Finance report• What are the key messages underlying

your M&A or financing storyline• What are the key sections and sub-sec-

tions? ■ Achieving a logical structure and sequence

• Start with the executive summary• Use of headings, sub-headings, sections,

subsections and numbering• Logical connection between ideas• Focus on topic sentences (first sentence of

each paragraph)• Sections should lead naturally into the

next ■ The executive summary

• Consistent with the Corporte Finance anal-ysis being presented

• Exciting enough to read the details• Should stand on its own even if you hav-

en’t read the original report• Should define the problem clearly and

present solutions ■ Avoidance of repetition

• Double-check section and sub-section headers

• Ask yourself on each sentence: is this al-ready mentioned elsewhere?

• Make sure your work is diverse at every level

■ Cross-referencing• Consistency in numbers and financial anal-

ysis throughout


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Effective Business Writing for Corporate FinanceContinued...

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• Source all data & information provided• Use consistent format - fonts and color

palette ■ Using an appropriate style of writing

• Concise, relevant accurate, descriptive vs. analytical etc

• Word choice, sentence fluency, and writ-er’s voice

■ Use of data• Choose powerful graphs & tables• Balance proportion of charts & texts• Data should reinforce the page message

■ Use of appendices• Show completeness and seriousness• Graphs and tables of secondary impor-

tance• Sensitivities on key results & analysis• Listing of all sources

■ Use of drafts ■ Report writing with multiple authors

Case Study II: Overview of well-written vs. badly written reports; practice of writing sections of a business report

Final Case Study

Participants are split into groups of 3 to 4 professionals. Participants are asked to write a brief 2-3 pages investment memorandum on a potential business acquisition and related financing.

The participants are given numerous analysis and documents regarding a European company, including;

■ Business profile; ■ Description of the industry and sector out-

look; ■ Financial statements and business fore-

casts; ■ Financing considerations.

Each group will present and defend their findings in front of the classroom. A full debriefing on each group’s presentations will then take place.


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European Term Loan “B”Date: 02 Feb 2018, 26 Sep 2018

Location: London Standard Price: £725 +VAT Membership : £580 +VAT

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■ ■

The European leveraged loan market saw issuance rise to €135 billion (an 85% increase vs the corresponding prior period) significantly outpacing high yield bond issuance of €86.8 billion. This trend is expected to gather pace in 2017 as issuers, particularly PE sponsors, appear set to prefer loans over bonds for a number of reasons. First, loans are currently enjoying lower spreads (E+350 + 0% Floor) than bonds (c. 6.6% all in); second, loans offer greater flexibility to sponsors in terms of the ability to both refinance (q.v. Flint Group, Cooper, B&B Hotels) and reprice existing facilities (q.v. Douglas €1.37 Term Loan “B”) whilst offering sponsors enhanced flexibility (and lower cost) in terms of their exit options.

Most, if not all, of the syndicated loans and many of the larger club deals (e.g. Independent Vetcare’s £180m Term Loan “B”) bear little resemblance to the traditional LMA precedents and include many features imported from high yield bonds or New York-style credit agreements (e.g. grower and builder baskets which apply inter alia to; debt incurrence, liens/collateral, restricted payments). The high yield bond and leveraged loan markets have been converging for some years (indeed the trend in Europe stared before the credit crisis with the arrival of the first cov-lite deals) but this convergence accelerated in 2016 in the face of the continuing benign conditions in credit markets caused by an imbalance of demand and supply and magnified by QE as well as the preference for increasingly influential U.S. lenders and sponsors for (more familiar) U.S. style documentation.

Whilst these Term Loan “B”s share many common features there are significant and subtle variations between them such that European Term Loan “B” market has fragmented into four different “styles”; first, English law cov-lite Term Loan “B” (typically for larger and better credits); secondly, English law covenanted Term Loan “B”s (typically or smaller or less attractive credits); thirdly, New York cov-lite Term Loan “B” and finally, High Yield style Senior Secured Term Loan “B”s generally used for very large transactions. The course will refer to current trends in the market by referring to the DebtXplained Loan Database which tracks the key terms in these Term Loan “B”s; including restrictions on transferability, MFN and sunset periods, equity cures.

The programme will appeal to practitioners involved in larger leveraged loan market such as lawyers, bankers in lending, PE professionals, corporate financiers, M&A advisors, debt advisors and restructuring. Investors in larger loans and direct lending will also benefit from an understanding of these topics since some of these features have begun to appear in much smaller deals (e.g. grower baskets in deals sub €50m).

Course Overview

■ ■


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European Term Loan “B”Continued...

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Key concepts ■ Different variations of European Term Loan

“B”• English law Term Loan “B”• New York law Term Loan “B”• European “high-yield” style Term Loan

“B” ■ The Restricted Group

• Inclusions and exclusions• Approach used in high yield bonds &

why it matters• Re-designation of subsidiaries to and

from the Restricted Group• Typical requirements

■ Material subsidiaries• What constitutes at material subsidiary

– market approach to the threshold %• The various tests: EBITDA and other

approaches• Relevance and application in the SFA• Date and manner of determination-

Certificate (LMA vs market approach) ■ Information and financial reporting ■ Term Loan “B” vs LMA approach

• Treatment of unrestricted group• Presentations• Access rights•

A word about baskets ■ Use and application ■ Key variables and their ramifications

• Lender vs Borrower friendly ■ Fixed baskets

• Life time vs annual limit• Carry forward and back

■ Grower• Application • Key variables

■ Application • Key variables • Scalable

■ Builder• Application • Key variables

■ Are baskets refillable, can amounts be split, restrictions

Case: review of use and application of different types of baskets

Voting thresholds, Amendments & Waivers ■ LMA / EUK thresholds vs NY style thresh-

olds

■ Majority lenders ■ Super-majority

• Thresholds • Typical matters

■ Entrenched rights • “Unanimous” consent? - Typical matters

■ Facility change / Structural adjustments (or equivalent)• Approval Requirements• Major vs minor vs payables• Matters affected

■ Snooze you lose – timing ■ Yank the bank

• Required consent threshold• Non-consenting trigger• Can non-consenting lenders be prepaid

or bought at par• Required ource of funds

■ Debt buy-backs• Permitted• Cap on amount• Disenfranchisement

Yield / Margins, Ratchets & Call protection & Hedging ■ Trends in LIBOR/Euribor floors

• Differences in NY law vs English law• Matters affecting the Floor

■ OID – market trends ■ Margin ratchets

• Incidence – Application to facilities & step downs

■ Commitments fees on RCFs etc ■ Call protection

• Application & Scope - Repricing Events• Specific carve-outs (Specifc Asset Sales

or Significant Acquisitions, CoC, IPO, EBITDA increase, other)

• Basis of calculation of the Call protec-tion (effective yield)

■ Hedging required

Permitted Acquisitions & Investments ■ Structure of ‘Permitted” acquisitions ■ Permitted Acquisitions – LMA vs Term Loan

“B” approach ■ Ability to acquire Majority interests & ap-

plicable requirements/ conditions• Type and structure of basket lifetime or

annual limit • Typical tests & thresholds• Similar or complemetary business• Leverage test applicable to Target• Due diligence requirement - Third party

/ Independent certification






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• Other restrictions (jurisdiction) ■ Treatment of pro-forma synergies

• Can management add synergies to the test

• What synergies qualify, time limits? ■ Limits on non-guarantor entities ■ Must target accede to the collateral pack-

age ■ Ability to acquire minority stakes

• Applicable requirements/ conditions

Permitted Asset Sales ■ Requirements for assets sales ■ Threshold amount ■ Nature of the consideration received ■ Other requirements ■ Fair market value – certificates? ■ Payment waterfall & de minimis amounts

Debt incurrence ■ Incremental / additional debt generally

• “Accordion–style” facilities• Permitted Alternative debt

■ Structure of incremental debt basket• Ratio debt vs hard vs soft caps• Grower cap• Ratio & hard cap• Hard and grower caps• High Yield Bond style

■ Accordion facilities • Terms and conditions

■ Intercreditor accession ■ Types of debt baskets

• Free and clear baskets• General basket • Acquired debt basket• Acquisition debt basket• Contribution debt basket

Case: review of use and application of different approaches to incremental (and accordion) debt

MFN & Sunset provisions that relate to Incremental Facilities ■ MFN provisions – scope

• Incidence in deals• Scope – application to specific facilities• Method – margin cap vs all-in-yield

cap• Other requirements and exclusions • Structuring the yield cap to avoid be-

ing gamed by borrowers• Issues for lenders

■ Sunset provisions• Incidence • Duration• Effective date?• Differences in NY law vs English law

Case: review of approach to MFNs and sunset provisions

Restricted payments (Distributions) ■ Permitted / Restricted Payments General

Basket(s)• Hard vs soft caps• “Source of funds” condition• “Builder basket” approach

■ Investor Payments Leverage Basket• Typical range

■ Available Amount (“AA”) / Cumulative Credit (“CC”) - Leverage compliance test

■ Investor payments - Leverage Basket Fund-ing Sources (other than AA/CC)

■ Other conditions for Investor Payments Lev-erage Basket (other than AA/CC)

Sponsor fees & Sub-debt payments ■ Types of fees and their caps

• Holding Co / Admin fees• Sponsor / Monitoring fees• Advisory fees• Other material fees• Parent Debt Servicing / Fees/ Expenses

■ Aggregate of hard capped equity and sub debt related payments• Equity repurchases• Employee benefits

Negative Pledge, Permitted liens / security ■ Can incremental debt be secured & if so

what assets are available• Existng collateral• No colateral assets• Non-Guarantor Restricted Subsidiaries• Restrictions on securing incremental debt

■ Availability of general and other baskets ■ Hard vs soft “grower” permitted lien baskets ■ Intrecrediotr accession

Mandatory prepayments (Cash sweeps) ■ Excess cash

• Opening percentage• Step down • Step down mechanism – linear or stepped

■ IPO• Applicable repayment percentage






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■ [Available amount vs Cumulative Credit basket]

■ The five main basket combinations ■ CNI and “out of the box” amount ■ Build up basket start date – when does

this start? ■ Ratio test

• Leverage• FCCR• Other

■ Change of control• Is this treated as an EoD or mandatory

prepayment• Six approaches – automatic exit, Lender

has option etc

Transferability & Portability ■ Transferability

• Whitelists • Approved lenders• Blacklist / Disqualified Institutions List

present• Specific affected parties

■ Industry competitors ■ Loan to own investors

• Consent, Demmed consent & “Resona-blnesss requirement

• Consultation • Carve-outs• Minimum transfer & hold sizes – inter-

action with Related/ Exisiting lenders ■ Matters affceting the RCF ■ Portability

• Ratings test• Ratio - Leverage or Enterprise value

ratio ■ Timing periods/limits & Frequency ■ Additional requirements

Financial maintenance covenants & covenant suspension

■ Financial covenant package type ■ Review of current market approach: Tradi-

tional vs Cov-lose vs Cov-lite ■ “Springing” leverage covenants

• What are they• Typical terms

■ Aggressive add-backs to EBITDA• Synergies and other add-backs• Por-forma ajustments - Scope• •dditional requirements and time limits

■ Equity cures • Current market approach – what can be

cured; how often, over-cures?• Deemed cures – what are they and are

they widely used ■ Deal outliers

• Introduction of minimum EBITDA cove-nant

• Maintenance covenants tested at great-er intervals

■ Covenant suspension• Trigger• Availability and scope

Case: review of Equity cures

Guarantor coverage ■ Incidence of guarantor coverage ■ GCT percentage (where present) ■ Exclusion of Material subsidiaries & mate-

riality threshold ■ Other market exclusions ■

Events of Default ■ LMA EoDs and typical market exclusions ■ Clean-up period ■ Cross-default or cross-acceleration ■ Right to accelerate ■ Grace periods

• Non-payment• Other obligations• Commencement of grace period

■ MAC• Review of market variations





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How to Buy a Business - A Practitioner’s GuideDate: 15 May 2018, 22 Oct 2018


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Creating shareholder value through the pursuit of a successful M + A strategy has been shown to be a far from risk-free activity. Buyers overpaying or using inappropriate financing methods can lead to destruction of value and in some cases financial distress.

The course covers topics of risk and return, process, investigation and integration as a practical guide to identifying and negotiating acquisitions.

The Drivers of Growth ■ Shareholder value ■ The company life cycle

• The importance of directors recognising the value curve

■ Risk and return• Relating risk to the life cycle phase of the

company / target ■ Product market growth and decline

• Evaluating niches, substitutes, value in innovation

REVIEW: Comparison and contrast of the lifecycle of three different companies, highlighting how success or failure with acquisitions has determined their fate

■ ICI ■ Debenhams ■ GKN

Growth through Acquisition ■ Assessing the alternatives

• Investment• JV• Acquisition•

DISCUSION: Advantages and disadvantages of each approach

Determining the acquisition• Market objectives

ӹ Consolidating a fragmented market ӹ Building the value proposition

• Management issues ӹ Assessing cultural fit

• Price parameters ӹ Knowledge of comparative deals

Opportunity cost ӹ Is it a “now or never” deal

REVIEW: The Ansoff Matrix, a handy way to categorise potential risks in acquisition strategies

■ Pitfalls to avoid • Realism of synergies

ӹ Risks of prediction, cost and achievement• Accounting standards

ӹ Who is the auditor, what principles are followed

• Judging forecasts ■ Scepticism rules

Commercial factors • Target’s history• Recurring revenue• Intellectual property• Customer list

CASE STUDY: Reviewing company information to arrive at a value, taking into account qualitative and strategic factors

The Acquisition Process ■ Establishing acquisition criteria

• Target size and affordability • Potential synergies• Market / competitor impact• Regulatory factors• Shareholder impact

■ Due Diligence • Investigation prior to offer

ӹ Public sources ӹ Private sources

■ Verification• Contracts• Accounts• Pensions• Employee disputes• Litigation

CASE STUDY: Reviewing summary information on a company to determine which areas need investigation and who should have responsibility for the task

■ Structuring the deal • Earn-out / deferred consideration• Non-compete undertakings • Warranties and indemnities • Disclosure letters

Acquisition Integration ■ Success / failure factors ■ The importance of the integration team ■ Earn outs and accounting issues ■ Incentivising key managers ■ Establishing clear reporting lines


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How to Sell a Business - A Practitioner’s GuideDate: 17 May 2018, 24 Oct 2018


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Course Overview

Selling a company to achieve a vendor’s target price is frequently a time-consuming and complex process. In addition to the legal and accounting considerations there are issues of presentation, timing and tactics that are important elements of the campaign to close a successful sale.

The course covers the practical steps that are required to plan, negotiate, and close a successful sale. Valuing the business to be sold and the effective presentation of the commercial attractions of the business are key elements, as are choosing the appropriate advisers and

Overview of the Process ■ Motives and objectives of the vendor ■ Which outcome is preferred

• Cash only• “sale with honour”• Management buyout• IPO

■ Timescale

Preparing the Company for sale ■ Optimising the operations

• Removing skeletons, resolving related party conflicts

■ Resolving accounting / audit issues• Tightening up provisions, write offs, stock

obsolescence ■ Clearing legal points

• Employee issues • Customer / supplier disputes

■ Choosing advisers ■ Tax considerations

• The vendor’s position • Company PAYE, corporation tax

Quiz: What are the top ten objective of a vendor

Assessing the value of the business ■ Other factors

• IPR• Market share• Customer base• Niche products• Strategic value to a buyer

Exercise: Calculating the value of a business using different metrics

Initiating the Process ■ Choosing advisers

• Investment bank• Merger brokers• Accountants• Other

■ Agreeing the mandate• Fees

ӹRetainer, success, no go• Exclusions

ӹCompanies and territories• Time limits• Indemnities

■ Preparing key documents • Information memorandum • Support material

ӹConfidentiality undertakings, product

information• Due diligence pack

ӹReasons for, use of vital data rooms ■ Management preparation

• Confidentiality• Conflicts of interest• The “sale team”• Presentation material

The Sale Process ■ The cost / risk / timescale issues in

• A trade sale• Buyout• IPO

■ Trade sale approaches • Public auction• Private auction• Bilateral negotiation

■ Organising an auction • Identifying the purchasers

ӹTiering prospects into probables, possi-bles, maybe

• Defining the deadlines ӹThe importance of realism

• Contact and confidentiality ӹDealing with large company buyers

• Judging the offers ӹWill a “no price” offer work?

• Conducting the second stage discussions ӹCompany and management visits

• Preferred bidder and exclusivity ӹHow long for exclusivity?

CASE STUDY: Reviewing an information memorandum on a company sale to assess: the value of the business, the most likely buyers

■ Sealing the deal• Earn-outs

ӹBridging the valuation gap• Warranties, disclosure letter

ӹBuyer / vendor conflict• Time limits, caps• Completion accounts • Comfort letters

■ Alternative outcomes• IPO, timescale• MBO, management conflicts• Post “exit” lock-in• Ongoing relationship


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Intercreditor (& AAL) Issues In Leveraged, Real Estate and ABL Transactions

Date: 27 Feb 2018, 18 Jun 2018, 11 Sep 2018, 30 Nov 2018Location: London Standard Price: £695 + VAT

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Course Overview

Intercreditor agreements have assumed increasing importance over the past few years as debt market has witnessed the evolution of a raft of esoteric structures in conjunction with a wide range of funding instruments such as high yield bonds, unitranche and, more recently, asset based lending (“ABL”). The dramatic rise of unitranche and the myriad of structures that term covers, has introduced a new level on complexity and seen the introduction in Europe of Agreement Amongst Lenders which may carve out specific matters from the Intercreditor.

Historically, the 2009 LMA Intercreditor precedent was aimed at senior and mezzanine structures but could also be accommodate to accommodate second lien. The financial crisis flushed out the numerous issues in the prevailing arrangements in a raft of landmark cases e.g. European Directories, Stabilus and IMO Carwash. RBS Worldpay represented the first real effort by mezzanine lenders to redress the balance of power and may well have led to the publication of a revised LMA Intercreditor in 2012. This sought to address some of these issues, particularly valuation and the duties of the Agent vis-a-vis the mezzanine.

The increasing popularity of pari Loan / Bond structures after the crisis, which embraced a raft of variations, raised a new range of issues and compelled the LMA to publish a SSRCF Intercreditor in 2013 aimed at alleviating some of the problems posed by these structures. Real estate transactions also vary from the leverage cousins and induced the LMA to produce an Intercreditor for Real Estate transactions in 2014. Whist that document is broadly similar to the leverage Intercreditor it seeks to address a range of matters which are specific to those transactions.

Finally, regulatory pressure on bank lenders is driving a rise in ABL to fund working capital in place of the traditional RCF. Whilst ABL is widely used in the U.S. market (in conjunction with raft of other financial instruments) has taxed the imagination of market participants who have wrestled with ways of trying to shoe-horn these structures together.

Last, the rise of cross-border deals has added an additional layer of complexity and intercreditor arrangements have to be mindful of issues arising from deals which embrace other jurisdiction, particularly the US.

Introduction to Ranking and Subordination techniques ■ Summary of key terms of relevant Junior

debt instruments • Mezzanine• Second Lien Loans & Notes• Subordinated/Unsecured Notes• PIK Loans & Notes

■ Methods of creating ranking/subordination• Taking collateral / security• Contractual• Structural• Equitable subordination (US, Germany,

Spain, France, Italy)

Relevant documentation and precedents ■ 2009 Leverage precedent ■ 2012 Leveraged precedent (amended to

2014) ■ SSRCF 2013 version for pari Loan Bond

structures ■ 2015 Real Estate precedent

■ The LMA ICA as a point of departure for nego-tiations

■ Agreement Amongst Lenders (“AAL”)• Use and application

Review of relevant deal structures ■ “Traditional” senior loan vs. mezzanine, share-

holder loans ■ Legacy deals - senior, 2nd lien loans, mezza-

nine, shareholder loans ■ Pari-Senior Loan/Bond structures (“Loan and

Note”) ■ Real Estate transactions ■ Unitranche structures ■ Asset Based Lending structures

Ranking & the Waterfall / Cascade: general approach ■ Who should be a party to the ICA ■ Ranking of the various “layers” of debt

• Typical ranking • Position of hedge liabilities• Dealing with intra-Group & parent liabilities


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• Issues arising in re Loan notes, Equity substitutes, Vendor loans

■ Rationale for inclusion as parties to the Inter-creditor

■ Rationale for exclusion as parties in the In-tercreditor

■ Position in pari Loan / Bond structures ■ Ranking as to Payment

• Permitted Payments on Hedge Liabilities• Permitted payments & restrictions on Mez-

zanine• Mezzanine Payment “Stop Notice”• Potential abuse and cure• Mezzanine Debt purchase by sponsor

■ Ranking as to Proceeds of Enforcement of Transaction Security

■ Senior Facility Liabilities - Restrictions and Permissions

■ Security and guarantees/indemnities - Senior Lenders

Enforcement of Security ■ Who can Enforce – importance of the “In-

structing Group”• Instructing Group in Senior loan v Mezz

structures• Instructing Group in pari Loan / Bond

Structures• Role of the “Security Agent”

■ Timing of Enforcement standstills• Enforcement standstills

■ Senior loans vs. mezz ■ pari Loan / Bond structures

• When can Mezz and other junior lenders Enforce?

■ Problem areas re Enforcement • Timing, manner of Enforcement• Role of the Security Agent in Enforcement• Lessons from Saltri v MD Mezzanine (Sta-

bilus) case

Non-Distressed disposals ■ Application and scope – “Non-Distressed”

defined ■ Interaction with the Senior Facilities Agree-

ment ■ Interaction with the Mezzanine Agreement ■ Release of Security ■ Waterfall of “Disposal Proceeds” ■ Position in pari Loan / Bond structures

• Covenants in High Yield Bonds affecting Disposals

• Reconciling conflicts in pari Loan / Bond structures

Distressed Disposals

■ Release of Guarantees and Security• What can be released?• Circumstances in which the junior lender’s

claims can be “discharged”• Lessons from the European Directories case

■ Valuation issues• Position under 2009 LMA ICA

■ Why non cash consideration may be accept-able under the 2009 ICA?• Position under 2012 LMA ICA• Lessons from IMO Carwash case – what

went wrong (and how to fix it)• A closer look at Stabilus – is this more in-

structive?• Valuation approach – going concern vs.

liquidation• Valuation method - problems with “tradi-

tional approaches” in distress• “Fair value” defined

■ Approaches per the 2012 LMA ICA ■ Potential problems with “Fair Value” (why

“fair” may not be “fair”) ■ What is a “Competitive Sales Process”?

• Solutions for Junior lenders re “Fair Value” ■ Form of consideration; cash vs. non cash con-

sideration (2012 ICA) ■ Credit bidding

• Is it available under the Intercreditor (2009 vs 2012)

• The Stabilus position• Credit bidding in action• Potential pitfalls

Interaction of cross-default vs. cross-acceleration between senior & junior ■ Implications for EoD under the SFA on the

Mezzanine ■ Trigger options for Mezz EoD

• SFA EoD, Default or Acceleration ■ Limit to specific Events / covenants

• Typical carve-outs ■ Position in pari Loan / Bond structures

• Potential solutions

Issues with Hedging & Hedge parties ■ Definitions relevant to Hedging

• “Close-out Netting” • “Senior Credit Participation”

■ Voting pre-close out – key issues ■ Post close out - inclusion in “Majority Senior

Lenders”

Option to Purchase & Turnover ■ Key terms ■ How effective is this remedy: Examples in

practice• Lessons from IMO Car Wash






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Course Content

• Does Stabilus change things ■ Approach in pari-Loan/Bond structures

• Is it workable solution? ■ Current market trends / wish-list for Mezza-

nine ■ Turnover per and post enforcement

Key differences between the Leveraged and Real Estate Intercreditor ■ Differences in deal structure and ramifica-

tions ■ Approach to security ■ Issues with the Security Agent ■ Dealing with Hedging ■ Acquisition of shares in the mezzanine bor-

rower ■ Cure rights – a different approach ■ Release of security and disposals

Intercreditor issues in Asset Based Lending structures ■ Key concerns of ABL lenders ■ Key concerns of the other finance parties

(high yield, unitranche, Loans) ■ Interaction with ABL Facilities (Algeco

Scotsman) ■ Intercreditor issues in ABL

• Standstills• Enforcement• Dealing with “pools” of collateral

■ Possible solutions in the European context

Issues in Agreement Amongst Lenders ■ Use and application (lessons from America?) ■ Intercreditor vs AAL ■ Issues in the AAL ■ Problems for borrowers

Intercreditor issues arising from US parties / security ■ Terms to include in LMA / European Inter-

creditor• Bankruptcy waiver• Automatic Acceleration• Separate security

■ EU terms to include in NY style Intercreditor• Release / Assignment of claims on sale or

enforcement• Payment subordination





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Introduction to the Takeover CodeDate: 01 Mar 2018, 12 Oct 2018


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Course Overview

On this introduction to the Takeover Code course, participants will learn about how the Takeover Panel operates in practice and how to apply the six general principles.

The course will cover the issues involved in approaching target companies, making announcements, giving independent advice and complying with share dealing restrictions. Participants will also gain a strong understanding of voluntary, mandatory and partial offers as well as the principles of the bid timetable and the conduct of the parties during an offer period.

The course will examine the circumstances when the Takeover Code is applicable, the relevance of the key rules of the Takeover Code, the application of the Code in practice and the documentation requirements of the Panel.

Introduction to the Takeover Code ■ How the Takeover Panel operates ■ Companies, transactions and persons

subject to the Code ■ Enforcement of the Code

The Six General Principles and their application

Key Code definitions

The approach, announcements and independent advice (Rules 1-3) ■ Secrecy ■ When announcements are required ■ Announcements of possible offers and

naming ■ Terms and pre-conditions in possible

offers ■ Automatic 28 day PUSU ■ Firm offer announcements (Rule 2.7) ■ Consequences of statement of intention

not to make offer ■ Irrevocable commitments ■ Independent advice

Dealing restrictions, disclosures and share purchases ■ Prohibited dealings ( Rule 4) ■ Consideration to be offered (Rules 6 and

11) ■ Consequences of certain dealings (Rule

7) ■ Disclosure requirements in offer period

(Rules 8 and 38) ■ Timing restrictions on acquisition of

shares and exceptions (Rule 5)

Mandatory offers (Rule 9) ■ When required ■ Conditions which are possible ■ Price payable ■ Whitewash procedure ■ Purchase of own shares (Rule 37)

Voluntary offers ■ The acceptance condition (Rule 10) ■ The CMA and the European Commission

(Rule 12) ■ Pre-conditions and conditions in firm offers

(Rule 13) ■ Partial offer requirements (Rule 36)

Provisions applicable to all offers ■ Multiple classes of share capital (Rule 14) ■ Convertibles and warrants (Rule 15) ■ Special deals with favourable conditions

(Rule 16) ■ Announcement of acceptance levels (Rule

17) ■ Restrictions following offers and partial

offers (Rule 35) Conduct during the offer ■ Standards of care for Information (Rule

19) ■ Responsibility for information ■ Unacceptable statements ■ Post-offer undertakings and statements of

intention ■ Equality of information (Rule 20) ■ Restrictions on frustrating action (Rule 21)

Documents ■ Overview of document rules (Rules 23 to

27) ■ Distribution of documents and checklists

(Rule 30)

Profit forecasts, QFBS and asset valuations (Rules 28 and 29) ■ Different types of profit forecast ■ Reporting requirements ■ Disclosures for Quantified Financial Benefit

Statements ■ Consensus forecasts ■ Asset valuation reporting requirements

Outline timetables (Rules 31 to 34 and Appendix 7) ■ Contractual offers ■ Schemes of arrangements


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Introduction To The FCA Listing, Disclosure And Transparency And Prospectus RulesDate: 11 Oct 2018


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Course Overview

Participants will learn about the general principles which underpin the Prospectus Rules, Listing Rules and Disclosure and Transparency Rules and be taught about their practical application regarding obtaining listings and executing further transactions.

They will gain a strong understanding of the role of the sponsor, the conditions and methods of listing, the listing procedures and the contents of prospectuses and all aspects of continuing obligations, including the disclosure of inside information.

They will appreciate how the provisions of the EU Prospectus, Market Abuse and Transparency Directives have been brought into UK regulation and examine the different requirements of premium and standard listings compared to those of AIM.

In addition to comprehensive slides, the course documentation includes detailed notes on the rules, summaries of FCA/FSA enforcement cases for breaches of the rules, and extracts from the different types of prospectus and circular covered in the course.

Background to the regulation ■ The EU Prospectus Directive, Market Abuse

Directive and Transparency Directive ■ How the regulators operate ■ Standard and premium listings ■ Recent problems with controlling sharehold-

ers: Bumi and ENRC

Listing Rules ■ Listing principles ■ General requirements for listing ■ Requirements for a premium listing

• Three year track record• 75% of business• Independence• Requirements for companies with con-

trolling shareholder• Special types of issuer

■ Types of flotation ■ Listing application ■ Suspension, cancellation and restoration of

a listing ■ Reverse takeovers ■ Sponsors

• Role and responsibility• Criteria for approval

■ Continuing obligations• Continuing eligibility requirements• Pre-emption rights• Transactions after flotation• Model Code• Documents requiring prior approval

■ Significant transactions• The class tests• Possible adjustment to/disregarding of

profits test • Break fee rules

■ Related party transactions ■ Share buy-backs

The Disclosure and Transparency Rules ■ Principal concepts ■ Effect of Market Abuse Regulation (MAR) on

Disclosure Rules ■ Disclosure and control of inside information by

issuers• What constitutes inside information?• Is an immediate announcement necessary?• Selective disclosure• Market rumours

■ Disclosure of PDMR dealings ■ Annual reports and interim reports ■ Disclosure of shareholdings

• Thresholds• Timing

■ Access to information ■ Corporate governance

Prospectus Rules ■ Requirement to produce a prospectus ■ Exemptions ■ Contents of a prospectus

• Example of rights issue prospectus• Omissions• Incorporation by reference• Historical financial information • Forecasts and pro formas

■ Approval and publication of a prospectus ■ Advertisements ■ Supplementary prospectuses ■ Passporting and third country issuers ■ Responsibility for prospectus

Key regulation differences with AIM ■ Comparison of premium and standard listings

and AIM


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Joint VenturesDate: 05 Feb 2018, 10 Sep 2018


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Joint ventures are an important option for businesses in their home country or internationally. Along with acquisi-tions it is a model for corporate growth.

The course looks at the reasons for joint ventures including the commercial reasons and how they are reflected in the legal structure and documents.

Looking at negotiations it focuses on the general aspect of negotiations as well as critical areas for joint venture negotiations.

The course recognises the commercial and legal problems that regularly arise during the life cycle of a joint venture. It covers the often thorny issue of pre contract documents including the differences in common and civil law.

It goes on to look at the different options of legal structures that can be selected depending on the commercial ob-jectives and addresses the advantages and disadvantages of each option including limited companies, partnerships and contractual joint ventures.

It then looks at challenges of decision making in a joint venture where parties are working to a common end but have different ultimate interests. This leads to differences, ways to resolve them are looked at and what happens if the joint venture partner are unable to reach a decision. , including deadlock and options such as ‘Russian Roulette’ and Texas Shoot Out’. How and to whom parties may transfer shares, minority shareholders.

Coming to the end of the life cycle the programme focuses on exit, termination and change of control.

During the course participants will look at case studies, look at sample documents and receive checklists to assist them with dealing with joint ventures a following the course.

Introduction ■ What is a Joint Venture? ■ Why enter into a Joint Venture? ■ Reasons for Joint Ventures ■ Choosing a legal structure ■ Key legal considerations ■ Information you need to decide on the legal

structure ■ Key success factors

Negotiating – General Guidelines ■ Objectives in negotiations ■ Strategy ■ BATNA ■ Zone of Possible Agreement ■ Price versus value ■ Creating and sustaining value ■ 10 areas where joint venture negotiations

can establish successful sustainable joint ventures

Pre Contract Documents – Heads of Terms/MoU with Sample Document ■ Pros and cons ■ Types of pre-contract documents ■ Duty of good faith ■ Letters of intent ■ Memorandum of Understanding

■ ‘Subject to contract’ ■ Governing law – choice and impact ■ Advice to negotiators – Checklist

Selecting the Legal Structure that Reflects Commercial Objectives – Key Determinants ■ Relevant laws ■ International joint ventures ■ Questions to address ■ Restrictions

Main Joint Venture Structures – Advantages & Disadvantages ■ Limited Liability Company ■ Limited Liability Partnership ■ Partnership ■ Contractual Joint Venture ■ Contentious areas

Decision Making ■ Directors ■ Votes ■ Quorum ■ Reserved Matters ■ Conflicts of Interest

Deadlock & Default


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■ Default ■ Casting Vote ■ Winding – up ■ Put and Call Options ■ Sale ■ ‘Texas Shoot Out’ ■ ‘Dutch Auction’ ■ ‘Russian Roulette’

Transfer of Shares ■ Pre – emption rights ■ Right of first offer ■ Right of first refusal ■ Pre – emption problem areas ■ Permitted transfers ■ Change of control ■ ‘Drag and Tag’ Rights

Exit, Termination and Change ■ Importance and Key Issues ■ Fixed term/joint renewal ■ Termination for convenience ■ Termination for Cause ■ Consequences of Exit/Termination ■ Winding –up

Case studies

Sample documents and checklists


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Leveraged Loans in Private Equity and Corporate Transactions

Date: 06 Mar 2018, 04 Oct 2018

Location: London Standard Price: £695 +VAT Membership : £556 +VAT

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Course Overview

This programme focuses on club and syndicated leveraged loans provided to both corporate and PE borrowers (i.e. typically this covers loans > 2.0x Debt/EBITDA for most sectors). Loan markets have experienced significant changes over the last few years on a number of fronts; first, larger, syndicated and club deals have seen the importation of terms from the bond markets (e.g. grower baskets and cov-lite, cov-loose packages). Many of these larger deals have also imported N.Y. style language, which is more familiar to U.S. borrowers and lenders. At the same time direct/alternative lending had made significant inroads into the lending market bringing with them a more eclectic approach to lending (e.g. a preference for bullet, as opposed to amortising facilities).

Whilst there are subtle differences between the objectives of corporate and PE borrowers, both share a common objective of seeking to obtain the optimum terms, pricing and flexibility which will allow them to execute their strategic objectives. Clearly the larger deals, where borrowers have the option of accessing the high yield bond market, offer borrowers greater flexibility however smaller facilities have also benefitted from stiff competition from direct lenders (which reaches well below that threshold - in some cases 15 million) which has forced banks and other lenders to offer borrowers better terms and pricing (e.g. grower baskets have been seen in facilities below 30 million).

The topics aim to provide participants with an understanding of the trends and key issues affecting loan facilities in both club deals syndicated deals and also provides borrowers and lenders with a template of how to approach the negotiations. The programme is aimed at borrowers and lenders as well as lawyers, accountants, debt and corporate advisory and other professionals involved in these transactions. Whilst there are subtle differences between objectives of corporate borrowers on the one hand and PE borrowers on the other; there is a high degree of overlap across.

Overview of the market trends affecting corporates and PE borrowers ■ Bifurcation of the leverage loan market ■ Trends larger syndicated deals ■ Trends in club loans ■ Influence of high yield bond market

trends ■ Impact of New York style documentation ■ Corporates vs PE – what’s the difference

Key negotiating strategies – the Borrower’s view ■ Criteria for selecting the most appropriate

lender - Banks vs Direct lenders ■ Key differences in approach between

banks and direct lenders ■ Pros and cons of Banks vs Direct lenders ■ Some banks (and branches) are different ■ Can direct lending applicable for corpo-

rate borrowers? ■ Strategies for negotiating the key com-

mercial terms ■ How to approach the term sheet

• Hard or soft terms?• Focus on everything or only a few “criti-

cal” issues ■ Do debt advisors offer value for money -

Getting the best from your advisors ■ What about the fees ■ A Checklist for borrowers

The Lender’s perspective ■ Beware Commitment letters – reflections

post Novus Aviation ■ The role of the information covenants – do

they really matter ■ If financial covenants don’t matter, what

does? ■ What to focus on in the collateral package ■ Problems with non-guarantor restricted sub-

sidiaries


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Scope of the Loan ■ Concept and composition of the “Cove-

nant (Restricted) Group” ■ Matters affecting Material subsidiaries ■ Matters affecting Immaterial subsidiaries ■ Dormant subsidiaries – why they matter ■ Issues re Joint Ventures & Equity

Changes to the Lenders ■ Transferring a loan – methods, pros and

cons• Novation• Assignment – legal and equitable• Sub-participation

■ Ability to transfer - Consent vs Consulta-tion• Trends in the leveraged market• Why transferability is important for

lenders• Potential problems for borrowers

■ Restrictions on Transferability ■ White / approved lists vs disqualified

lenders

Voting thresholds ■ Key voting thresholds & why they matter ■ Different problems for PE and corporate

lenders ■ Different approaches in syndicated vs

club loans• Majority lenders• Unanimous consent• Super-Majority lenders – “typical”

scope & thresholds ■ Potential pitfalls for lenders ■ Impact of Yank the Bank ■ Role of Snooze & Lose ■ Treatment of Hedge counter-parties

A word about baskets – how and why they matter ■ Role and application of baskets in the

loan market ■ Types of baskets, structure use and ap-

plication• Grower baskets• Builder baskets• Scalable baskets

■ Reclassification and splitting between baskets

“Permitted” definitions – how & why they matter ■ Role and relevance of the “Permitted”

definitions

■ Synchronising the “Permitted” baskets ■ Permitted Acquisitions

• Typical carve-outs- hard vs soft baskets• Additional restrictions

■ Permitted Financial Indebtedness / Security / Guarantees• Scope – Financial Indebtedness defined

(typical exclusions)• Incremental debt- scope and coverage• Accordion facilities

ӹTypical terms & conditions ӹPricing - MFN & sunset periods – what’s market

• General & other debt-related baskets ■ Permitted Payments - typical carve-outs

• What payments are permitted• Basket carve outs – amounts, caps, carry

forward/back• Subordinated debt, equity & equity substi-

tutes• Management/monitoring fees

■ Permitted Disposals• Scope & typical conditions

Debt Service ■ Differences between banks and direct lenders

to amortisation ■ Interest and default interest periods ■ Libor/Euribor floors ■ Original issue discount (OID) – use in the

deal, market trends ■ Margin and margin ratchets ■ Increased costs & gross up clauses

Specific issues for Revolving Credit Facilities (“RCFs”) ■ Clean-downs re RCFs ■ Cashless rollovers – why they matter ■ Problems with Headroom

Mandatory prepayments (Cash sweeps) ■ Excess Cashflow defined ■ Excess Cashflow – typical deductions ■ De minimis basket ■ Cash sweep – step downs (PE vs Corporate) ■ Use and Application of Retained Excess Cash

flow

Mandatory prepayments (Disposal proceeds) ■ What is a “Disposal” ■ Baskets to sale proceeds ■ Annual – individual deal amount ■ Annual basket carve-out ■ Excluded Disposal proceeds / Reinvested

amounts





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Other mandatory prepayments - overview ■ Acquisition Proceeds - overview

• What are “Acquisition Proceeds”• Excluded Acquisition proceeds

■ Insurance Proceeds• Excluded Insurance Proceeds• Basket – annual or per deal• Retention periods

■ Listing Proceeds & change of control

Covenants & Undertakings generally ■ Covenants generally – three categories ■ Information covenants

• Why and how they matters• Issues for lenders issues for borrowers• LMA v Market approach

■ General undertakings• Guarantor coverage – scope and issues

for borrowers• Core carve-outs for sponsors• Carve-outs for corporate borrowers

Financial covenants and Equity cures ■ The main covenants per the LMA & market

• Cash flow cover• Leverage• Interest cover• Capex limits• EBITDA limits (not LMA)• Springing covenants – use, application

and triggers• Other matters – starting headroom

■ Market trends• Number of covenants• Headroom

■ Equity cures• What do they apply to EBITDA, leverage,

cash flow?• Terms - How many, consecutive, over-

cures, application of the funds• Cures in practice

■ Covenant Suspension/ Loosening• Use and application• Typical triggers• Scope of covenants affected

Default and Events of Default ■ Default vs Event of Default ■ What are the key EoDs ■ Grace periods ■ Borrower-friendly exclusions ■ What about cross-default ■ MAC / MAE clause

• Do they still matter posy recent cases?

• Different formulations – LMA vs market (what is reasonable)

■ Problems with “Sanctions” clauses• How to mitigate conflict between U.S.

and EU regulations




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Listing Rules & Takeover Code FundamentalsDate: 11-12 Oct 2018

Location: London Standard Price: £1,100 + VATMembership Price: £880 + VAT

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Course Overview

On day one participants will learn about the general principles which underpin the Prospectus Rules, Listing Rules and Disclosure and Transparency Rules and be taught about their practical application regarding obtaining listings and executing further transactions.

They will gain a strong understanding of the role of the sponsor, the conditions and methods of listing, the listing procedures and the contents of prospectuses and all aspects of continuing obligations, including the disclosure of inside information.

They will appreciate how the provisions of the EU Prospectus, Market Abuse and Transparency Directives have been brought into UK regulation and examine the different requirements of premium and standard listings compared to those of AIM.

On day two participants will learn about how the Takeover Panel operates in practice and how to apply the six general principles.

The course will cover the issues involved in approaching target companies, making announcements, giving independent advice and complying with share dealing restrictions. Participants will also gain a strong understanding of voluntary, mandatory and partial offers as well as the principles of the bid timetable and the conduct of the parties during an offer period.

The course will examine the circumstances when the Takeover Code is applicable, the relevance of the key rules of the Takeover Code, the application of the Code in practice and the documentation requirements of the Panel.

Day One

Background to the regulation ■ The EU Prospectus Directive, Market Abuse

Directive and Transparency Directive ■ How the regulators operate ■ Standard and premium listings ■ Recent problems with controlling sharehold-

ers: Bumi and ENRC ■

Listing Rules ■ Listing principles ■ General requirements for listing ■ Requirements for a premium listing

• Three year track record• 75% of business• Independence• Requirements for companies with con-

trolling shareholder• Special types of issuer

■ Types of flotation ■ Listing application ■ Suspension, cancellation and restoration of a

listing• Reverse takeovers

■ Sponsors• Role and responsibility• Criteria for approval

■ Continuing obligations• Continuing eligibility requirements• Pre-emption rights• Transactions after flotation• Model Code• Documents requiring prior approval

■ Significant transactions• The class tests• Break fee rules

■ Related party transactions ■ Share buy-backs

The Disclosure and Transparency Rules ■ Principal concepts ■ Effect of Market Abuse Regulation (MAR) on

Disclosure Rules ■ Disclosure and control of inside information by

issuers• What constitutes inside information?• Is an immediate announcement necessary?• Selective disclosure• Market rumours

■ Disclosure of PDMR dealings ■ Annual reports and interim reports ■ Disclosure of shareholdings

• Thresholds• Timing

■ Access to information ■ Corporate governance

Prospectus Rules ■ Requirement to produce a prospectus ■ Exemptions ■ Contents of a prospectus

• Example of rights issue prospectus• Omissions• Incorporation by reference• Historical financial information • Forecasts and pro formas

■ Approval and publication of a prospectus ■ Advertisements


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Listing Rules & Takeover Code FundamentalsContinued

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■ Supplementary prospectuses ■ Passporting and third country issuers ■ Responsibility for prospectus

Key regulation differences with AIM ■ Comparison of premium and standard list-

ings and AIM

Day Two:

Introduction to the Takeover Code ■ How the Takeover Panel operates ■ Companies, transactions and persons sub-

ject to the Code ■ Enforcement of the Code

The Six General Principles and their appli-cation

Key Code definitions

The approach, announcements and inde-pendent advice (Rules 1-3) ■ Secrecy ■ When announcements are required ■ Announcements of possible offers and nam-

ing ■ Terms and pre-conditions in possible offers ■ Automatic 28 day PUSU ■ Firm offer announcements (Rule 2.7) ■ Consequences of statement of intention not

to make offer ■ Irrevocable commitments ■ Independent advice

Dealing restrictions, disclosures and share purchases ■ Prohibited dealings ( Rule 4) ■ Consideration to be offered (Rules 6 and 11) ■ Consequences of certain dealings (Rule 7) ■ Disclosure requirements in offer period

(Rules 8 and 38) ■ Timing restrictions on acquisition of shares

and exceptions (Rule 5)

Mandatory offers (Rule 9) ■ When required ■ Conditions which are possible ■ Price payable ■ Whitewash procedure ■ Purchase of own shares (Rule 37)

Voluntary offers ■ The acceptance condition (Rule 10) ■ The CMA and the European Commission

(Rule 12)

■ Pre-conditions and conditions in firm offers (Rule 13)

■ Partial offer requirements (Rule 36)

Provisions applicable to all offers ■ Multiple classes of share capital (Rule 14) ■ Convertibles and warrants (Rule 15) ■ Special deals with favourable conditions (Rule

16) ■ Announcement of acceptance levels (Rule 17) ■ Restrictions following offers and partial offers

(Rule 35) Conduct during the offer ■ Standards of care for Information (Rule 19) ■ Responsibility for information ■ Unacceptable statements ■ Post-offer undertakings and statements of

intention ■ Equality of information (Rule 20) ■ Restrictions on frustrating action (Rule 21

Documents ■ Overview of document rules (Rules 23 to 27) ■ Distribution of documents and checklists (Rule

30)

Profit forecasts, QFBS and asset valuations (Rules 28 and 29) ■ Different types of profit forecast ■ Reporting requirements ■ Disclosures for Quantified Financial Benefit

Statements ■ Consensus forecasts ■ Asset valuation reporting requirements

Outline timetables (Rules 31 to 34 and Ap-pendix 7) ■ Contractual offers ■ Schemes of arrangements


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Loan Documentation & Security Issues

Date: 08 Feb 2018, 11 Jun 2018, 10 Sep 2018, 05 Nov 2018 Location: London Standard Price: £725 + VAT


Course Overview


This course provides a full coverage of all of the important aspects of lending. It sets the scene by explaining the banks approach to lending, the roles of the key departments in the bank and the key documents in the process.

The programme then proceeds to discuss where to focus in analysing the loan and examines the key commercial terms in the loan and security documents from the perspective of both the lender and the borrower. Reference is made to established case law (Spectrum) and to recent cases, such as Stabilus and Urvasco and their relevance to key clauses and aspects.

Whilst Loan Market Association precedents are widely used as a point of departure for loans throughout Europe, there are a number of key clauses which are left “blank” for negotiation, in particular the various “permitted” baskets which need to be tailored on a case by case basis. Furthermore, syndicated (and club) loans raise additional issues which are not relevant in bilateral loans, such as voting thresholds and transfer restrictions.

In view of the standardised approach to lending across Europe, the course is presented so that it has a pan-European relevance.The course will also discuss briefly the potential impact of Brexit on existing and new documentation. The longer term impact on loan documentation will depend upon what is agreed between the UK and the EU.

Facilities in general ■ Investment grade vs high yield - key di-

viding line in credit markets, why & how it matters

■ Preliminary issues for the borrower – the 7 key aspects

■ Types of bank facilities & key issues• Committed vs uncommitted facilities• Overdraft, term loans, RCFs, multiple op-

tion facilities, swingline facilities ■ Obtaining a loan - bi-lateral vs club vs syndi-

cated deals• Key differences

■ Repayment styles and what drives them• Amortising vs balloon vs bullet• Lenders approach to amortisation

Overview: Key documents & their uses ■ Commitment and mandate Letter ■ Term sheet ■ Fee letter ■ The loan facility agreement ■ Security documentation

Case Study: Review key aspects of a sheet in the context of a relevant deal including the market flex

The key players in a loan & their roles ■ Dramatis personae in the loan (bilateral,

clubs & syndicated) ■ The mandated lead arranger ■ Origination & syndication departments ■ Credit department ■ Portfolio department ■ The facility agent & security agent

• key lessons from the Stabilus case

Issues relevant to syndicated (& club) deals ■ The various types of Lenders & what they

want • Banks, CDOs, institutional lenders, cred-

it & hedge funds, direct lenders ■ Role and importance of “The Instructing

Group” ■ Critical voting thresholds ■ Transfer restrictions

General approach to the loan ■ The Lender’s approach to the Loan ■ The borrower’s aims ■ Interplay of the various “models/scenarios” ■ How to “read” a loan facility agreement

• What to do and what not to do• What are the key areas to focus on

■ Generic drafting issues• Materiality• Reasonableness• De minimis / permitted baskets• Other conditional clauses (might, may,


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Loan Documentation & Security IssuesContinued...

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will, would etc)• Further assurances – provide less assur-

ance since Ford v Polymer Vision ■ Negotiating tactics in handling the banks

• What do the lenders want – the 3 key areas

• Knowing where to focus your negotiat-ing firepower

• How to handle the lenders when things “go wrong”

Different types of facilities – use and key issues ■ Overdraft - why these are unsuitable for

corporates ■ Term Loans

• Uses – general corporate purposes, M&A, capex

• Typical terms• Tranching and alphabet notes – ration-

ale and use ■ Revolving credit facilities

• Typical terms & problem areas• Fee /margin structure – what’s market

for committed amounts• Clean-downs – why they matter, what

to look for• Rollovers & cashless rollovers (lessons

from Lehman)• Dealing with “headroom”

The senior facility agreement – the key commercial terms ■ Primary loan senior facility agreements

• when and where are they used ■ Scope of the Loan

• “the Restricted Group” - where and why it matters

■ “Permitted baskets” what they are and why they matter

■ Interest & fees• Arrangement fees• Commitment fees• Typical margins• Utilisation periods• Use and interaction with hedging

(SWAPS) ■ Default vs. events of default and cross

default ■ LMA approach vs market ■ Impact of a breach; theory vs practice ■ Covenants generally

• Information• General undertakings (the negative

pledge & guarantor coverage test)• Financial covenants – typical covenants

■ MAC / MAE• Does it matter• Impact of the recent Urvasco case

Case Study: Discuss specific terms in the Senior Facility Agreement specifically various formulations of the MAC clause, the maintenance covenant package (which ones should be used and why), the role of the “Permitted” baskets

Types of security ■ Debentures defined (UK only)

• Companies Act (UK) approach vs case law (impact of recent Fons case)

■ Mortgages• Charges – fixed vs floating• Key differences • Key issues for lenders & why it matters

(Spectrum & Brumark Cases) ■ Pledges ■ Liens ■ Security re intellectual property and con-

tracts ■ Security in the EU – general approach

• Parallel debt arrangements ■ Collateral in the US – general approach

Case Study: Discuss some of the key issues affecting security from both lender’s and borrower’s perspective

Registering & perfecting security ■ Registering security interests created by

companies & LLPs• Charges created on or after 6 April 2013• Charges created before 6 April 2013• Charges created by overseas companies

■ Registering security over land ■ Registering security over intellectual prop-

erty ■ Priority between company mortgages and

charges ■ Methods of perfecting security

• The five key questions

Impact of Brexit on loan documentation ■ Events of default ■ Mandatory prepayments (illegality) ■ MAC clauses ■ Force majeure ■ Other matters (repeating reps, gross up) ■ Passporting issues ■ Governing Law and Jurisdiction


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Market Abuse Regulation - UpdateDate: 09 Mar 2018, 06 Sep 2018


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The EU Market Abuse Regulation (MAR) became applicable in the UK in July 2016 and will remain so at least until 2019 and probably longer, in spite of Brexit. This regulation replaces the Market Abuse Directive and the rules regarding inside information in DTR 2, the dealings of directors and other persons discharging managerial responsibility in DTR 3, and the Model Code. The regulation is also applicable for the first time to AIM companies.

This course examines requirements of the new MAR, its technical standards and its guidelines and the changes this has brought to the UK market abuse regime and to rules for Official List and AIM companies. In addition to comprehensive slides, course documentation includes the forms required by the FCA and a copy of the Market Abuse Regulation and Delegated Regulation.

The new MAR regime ■ Replacement of Market Abuse Directive ■ UK law offences ■ EU Regulations, Standards and Guide-

lines and ESMA ■ FCA’s approach to MAR ■ Extended application covering MTFs

such as AIM

Prohibition of insider dealing and market manipulation ■ Definition of inside information ■ Reasonable investor test ■ UK interpretation ■ Insider dealing and unlawful disclosure ■ Broadening of market manipulation

Disclosure of inside information ■ Requirements for public disclosure ■ Conditions for delaying disclosure ■ ESMA and FCA guidelines on legitimate

interests ■ Notification to FCA of delays in disclo-

sure ■ Standard for delaying disclosure and

notification ■ DTR 2 and AIM Rule 11 and guidance

Safe harbours from market abuse ■ Market soundings standards and ESMA

guidelines ■ Legitimate behaviour ■ Share buy-back programmes ■ Stabilisation

Insider lists ■ Responsibility ■ Technical Standard format with additional

information ■ Requirements for AIM companies

Managers’ transactions ■ Changes in director/PDMR notifications ■ Annual thresholds ■ Technical Standard for disclosure format ■ Revised definition of closed periods ■ Exceptions from closed period dealing

prohibition ■ DTR 3 guidance and deletion of Model

Code ■ AIM Rule 17 and 21 changes and guid-

ance ■ CLLS and Law Society Q&A and ICSA

Dealing Code

What Redcliffe’s clients are saying about the course;

“Helpful in highlighting both areas of change and issues of uncertainty – very

detailed”

“Very good overview of MAR”


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Modelling for DisposalsDate: 09 Feb 2018, 24 Sep 2018

Location: London Standard Price:£695 + VAT Membership Price: £556 + VAT

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Course Overview

This session covers the main divestiture options available to a firm as a going concern.

We focus on private market sale, Initial Public Offering (IPO), spin-off, split-off and equity carve-out. The motives, pros and cons of each structure are explained in detail in light of precedent transactions. We also discuss financial impact including balance sheet deconsolidation and EPS accretion (dilution). Spreadsheet work and real divestiture cases are used throughout the session.

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse divestiture transactions:

■ Building up from partially-complete models on real case scenarios ■ Running scenarios, iterating and optimising

Each participant should bring a laptop to the course to facilitate modelling work

Introduction ■ Why do corporates divest or restructure

their assets? ■ Review of key considerations

• Strategic;• Liquidity;• Valuation;• Tax;• Regulatory and anti-competition;

■ Promoted by management, sometimes pushed for by shareholders

■ Types of divestitures• Private sale;• Initial Public Offering (IPO);• Spin-off/split-up;• Split-off;• Carve-out.

■ Financial analysis performed• Structural impact;• Balance sheet deconsolidation;• Earnings Per Share (EPS) accretion (dilu-

tion) and relative P/Es.

Private Market Sale ■ Structural considerations

• Pre-deal and post deal structures ■ Balance sheet deconsolidation ■ Tax impact of deconsolidation ■ EPS accretion (dilution) ■ Reinvesting the sales proceeds

Case study I – T-Mobile USA divestiture to AT&T

Subsidiary IPO

■ Minority vs. majority stake IPO ■ Size of the offering ■ Cost of listing and disclosure requirements ■ Trading multiples as main valuation bench-

mark ■ IPO discount pricing

Case study II – Citigroup listing of Primerica

Spin-Off & Split-Up ■ Definition, advantages & disadvantages

• Existing shareholders receive a new share in spun-off entity

■ Adjustment of capital structure prior to spin-off

■ Best executed with traded stock for valua-tion purposes

■ Ownership structure impact ■ Balance sheet impact - treatment as divi-

dend-in-kind ■ EPS accretion (dilution) ■ Split-up similar to spin-off except old parent

dissolved

Case study III – ITT three-way spin-off in Exelis, Xylem and “old” ITT

Split-Off ■ Definition, advantages & disadvantages

• Choice between keeping shares in parent company or swapping parent company shares for subsidiary shares

■ Different treatments in over vs. under sub-scription scenarios


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■ Split-off structure impact ■ Balance sheet impact treatment as own

shares repurchased ■ EPS accretion (dilution)

Case study IV – Kraft split-off of post cereals business

Carve-Out ■ Definition, advantages & disadvantages

• Usually initial step of a two-step spin-off and split-off

• IPO of subsidiary shares (primary/sec-ondary shares)

■ Financial structures typically adjusted prior to the offering

■ Carve-out structure impact ■ Balance sheet impact treatment and

non-controlling interests ■ EPS accretion (dilution)

Case study V – Mead Johnson separation from Bristol-Myers Squibb as a two-step process: equity carve-out followed by split-off

Conclusion Review of all strategic alternatives, structures, balance sheet and EPS impact to the course to facilitate modelling work


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Modelling for Stressed and Distressed CompaniesDate: 07-08 Feb 2018, 25-26 Sep 2018


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Course Overview

This course focuses on modelling restructuring for stressed and distressed companies.

First, we analyse stressed corporate from a credit analysis perspective and model the debt payment and key credit ratios. We then look at gone-concern scenarios and review distressed companies. We explore and model the steps facing distressed corporates, including debt restructuring packages, in-court and out-of-court settlements and liquidation. We look at the perspective of distressed corporates, debt holders and creditors.

At the end of the training, the participants will be able to: ■ Explain the differences between a stressed and a distressed company ■ Understand the valuation of a distressed company ■ Model the various options for the debt holders and creditors of a distressed company ■ Model the pecking order of debt repayment in a liquidation

DAY ONE

STRESSED COMPANIES

This module focuses on the analysis of companies that are solvent, but might become distressed should trading or financing circumstances deteriorate. We focus on operating cash flow dynamics (e.g. cash conversion), capital structure issues (e.g. understanding structural issues and assessing refinancing risk) and valuation implications.

Introduction ■ Definition and review of stressed companies ■ Introduction to Dominos Pizza stressed situ-

ation

Capital structure analysis ■ Using credit ratios to assess credit risk (e.g.

debt / EBITDA, EBITDA / interest) ■ Understanding structural issues

• Cash flow upstreaming issues and struc-tural subordiantion issue

• Intercompany debt guarantees, multiple borrowers with joint & several liability, intercompany loans, etc.

■ Assessing refinancing risk ■ Market data (credit “spread” to measure

credit risk, bond prices & bond yields, CDS and credit indices), sources and reliability of data

Financing issues ■ Different debt products and which compa-

nies realistically have access to them and what creditors look for in re-financing / new financing

■ Debt terms & conditions including credit ratio covenants and the potential to trigger early debt repayment

Case study I – Dominos Pizza – detailled modelling and full credit analysis

DISTRESSED COMPANIES

ObjectiveThis module focuses on the analysis of companies that have become distressed. We focus on reviewing the capital structures and model different alternatives, including liquidation and restruturing the debt package taking into acccunt the perspectives of the different equity and debt holders.

Insolvency and Valuation ■ Balance sheet involvency ■ Cash flow insolvency ■ Link between Entreprise Value and Equity

Value• Equity value is zero and debt trades below

book values

Subordination ■ Secured vs. unsecured ■ Contractual ■ Structural ■ Guarantees


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Strategic Options ■ Raising capital ■ Debt restructuring (out-of-courts) ■ Debt restructuring (in-court) ■ Asset sales ■ Sell the business ■ Liquidation

Valuation Methodologies ■ Liquidation vs. going concern ■ Liquidation value

• Recovery rate ■ Going concern

• EBITDA multiples

Valuation issues ■ Limited time for due diligence ■ Usefulness of historical record as a proxy

for the future ■ Management issues

DAY TWO

Recovery Values ■ Asset liquidation value usually estimated

as a % of book value ■ Most liquid assets (cash and marketable

securities): 100% recovery rate ■ For most assets only a fraction of book

value recoverable ■ Liquidation fees

Case Study II: Modelling of different recovery values of an industrial company

Priority Ranking ■ Contractual subordination

• Senior, subordinated, preferred and equity

■ Security ■ Structural subordination

• Borrowing entity• Maturity• Guarantees

Distressed Companies – Financial Modelling ■ Workout of Schefenacker, a German au-

to-parts manufactuer ■ Valuation of companies under different

options• Going concern, liquidation and restructuring

■ Modelling of the debt under restructuring sce-narios• Debt forgiveness, payment extensions,

debt-equity swaps

Case study III – Detailed modelling of Schefenacker workout


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Negotiating Heads of Terms (LOIMOU) & Related IssuesDate: 05 Mar 2018, 12 Oct 2018


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Course Overview

The Heads of Agreement (“Heads”) are perhaps even more important than the SPA since, if they are poorly drafted, they can fail to clarify the essential aspects of the deal adequately they can either delay its completion (or even scupper the transaction) whilst the parties revisit the original terms. Secondly, they can inadvertently create a binding obligation to conclude the deal on unfavourable terms if they omit suitable CPs; for example, not making the deal conditional on adequate due diligence or available financing or being unable to adjust the purchase price later when the assumptions on which the initial price was based, differ post due diligence and finally they could expose the parties to potential liability even if the deal does not proceed (e.g. the duty to negotiate in good faith).

Negotiating some cases, (e.g. dealing with unsophisticated sellers) failure to address contentious issues in the heads can mean the transaction doesn’t complete or takes much longer. The three areas which create the most friction are; First, which Accounts (and accounting policies) have been used by the seller as the basis for valuation (private owners rarely use IFRS/GAAP); secondly, what qualifies as debt (or cash) in the equity bridge and finally, if an earn-out is to be used, what-if scenarios must be considered to avoid disappointment and disputes later.

Whiles the Heads are vital, they often dovetail with other key aspects in the deal particularly the Confidentiality (the “NDA”) and the Exclusivity. Whilst these aspects are often included in separate documents they may also appear in the Heads themselves. They play important role in the deal in differing ways.

The NDA is often the first point of friction between the parties and thus sets the tone for the negotiations that follow. Its rationale is often misunderstood by many practitioners; whilst it is true that confidentiality is critical in deals with proprietorial IP, they offer other benefits to sellers and even the ultimate buyer too. Getting the terms of the Engagement letter right also matters; not only does it set the scope and fees for work but, as numerous clients have found out to their cost, Tailgunner fees can have a nasty sting in the tail (e.g. the Recap and Grandtop cases).

The programme also reviews other critical documents and elements of the M&A process which precede the SPA but which are inextricably linked with the final SPA. For example, Due diligence is inextricably linked with the warranties, disclosure and indemnities but it is vital to strike a balance which enable buyers to make an informed view on the target whilst protecting key commercial information on the target if the deal does not proceed. In this context, the data room (and data room rules) play an important part in this but also giving the seller insight into the buyer’s thinking.

The programme is aimed at those involved in M&A transactions and is designed to focus on the key legal and commercial issues of the deal. It will appeal to lawyers, corporate finance advisors, bankers and principals in the UK and Europe.

Part 1: Heads of Terms (“Heads”)

Tactical matters ■ What’s in a name & does it matter – Heads,

Term sheet, LOI, MOU etc. ■ Rationale & Purpose

• Are they always necessary?• 7 key advantages of using Heads• 4 disadvantages and how to mitigate them

■ Format of Heads • Detailed vs short• Who prepares them

Key legal issues to consider ■ Legally binding or not (q.v. RTS Flexible Sys-

tems case)• Clauses which should not be legally binding• Clauses which should be legally binding• Position in Europe / Civil law• Position in the UK• Impact of “Subject to Contract” (q.v. Global

Asset case) ■ Regulatory matters – Financial Promotion?

(§21, Financial Services and Markets Act 2000)

■ The Duty to negotiate in Good Faith• UK vs Europe/ Civil law• Traps for the unwary

■ Agreements to Agree

Parties, deal structure, price & consideration ■ The Parties (and any guarantors) ■ Description of the proposed transaction

• Deal structure• Full title full title guarantee’ and ‘limited

title guarantee’ ■ Details of the Purchase Price

• Fixed price, a range or to be determined• Basis/Assumptions on which the price is

based (why this matters)• Valuation assumptions

The purchase price mechanism – Locked Box


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v Completion Accounts ■ Three critical issues which need to be ad-

dressed in the Heads (& not left to the SPA)• Which set of “Accounts” are used – why

and how this matters• Earn-outs – defining the benchmark & how

to mitigate problems• Specific issues with the Equity Bridge

■ Nature and timing of the Consideration• When the consideration will be paid• Nature of the consideration e.g. cash

shares loans etc.

The Main Conditions ■ How and why this matters to the buyer ■ Required approvals - clarity is key ■ Due diligence

• Arrangements & requirements• Access to key staff• Data rooms

■ Completing a definitive, legally binding SPA• Who prepares this & why that matters

■ Material Adverse Change• Scope

■ Commercial matters, Legal & Regulatory proceedings• Commercial contracts & licenses / CoC• Completion issues

■ Financing • Terms of financing inter-relation with the

financing documents ■ Pre-completion restructuring ■ Timing - Milestones & long-stop dates

Limiting Liability – Representations, Warranties, Disclosure & Indemnities ■ Liability for pre-contractual statements ■ Dealing with the Warranties

• General or Specific approach to warranties• Scope • Tactical matters for the parties

■ Warranty insurance ■ Due diligence - a risk matrix ■ Interaction with Warranties and Disclosure ■ Key areas of DD

• Lawyers• Accountants / tax• Commercial DD• Insurance• Environmental

Miscellaneous ■ Transaction documents

• Migrating the Heads to the SPA• Interaction with other key documents• Non-compete - Issues re employees and

customers ■ Costs & Break Fees

• Triggers for break fees• Potential problems with Break fees• Legal issues – Is it a penalty?

• Fiduciary duties• Financial assistance

■ Other agreements ■ Rights of third parties ■ Governing law and jurisdiction

Confidentiality letter / NDAs Real purpose of NDAs

• Seller’s perspective • Buyer issues

■ Long vs Short form ■ “Confidential Information” defined

• Form, Source, Method ■ Dealing with Extremely sensitive information ■ “Residual” clause ■ “Authorised Persons” defined

• Seller and buyer issues ■ The 9 Key Undertakings by the Buyer ■ When the deal fails – “Return or Destroy”

• Potential problem areas for the buyer ■ Enforced Disclosure ■ Other ancillary terms

• No offer, representation, warranty or license• Non-solicitation of staff, customers, suppli-

ers• Non-disclosure of discussions• Enforcement and remedies

■ Practical steps for the Seller

Exclusivity ■ Rationale ■ Format – separate document or in the Heads ■ Lock outs vs Lock ins (are latter enforceable)

• Duration - Potential problems “”reasonable period”

■ Pros and cons • Seller’s view• Buyers view

■ Main clauses• Conduct during the Exclusivity Period• Approaches by 3rd parties• Access during the Exclusivity period• Relief and Remedies• Announcements• Termination & Waivers • Costs• Status of the Exclusivity

■ Issues in re fiduciary duties

Appendices (covered time permitting – materials in Appendix)

Engagement letters ■ Defining the deal ■ Role & scope ■ Remuneration & expenses

• Contentious issues - Abort and Tailgunner fees

■ Duration and Termination ■ Liability and Limiting liability ■ Hold Harmless letters


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Negotiation Skills in M&A TransactionsDate: 6 Mar 2018. 20 Sep 2018


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Course Overview

Course DescriptionThis course has been developed to provide mid-level and senior professionals involved in M&A transactions (advisors, lawyers, accountants, financing professionals, corporate development professionals, integration managers etc) with the key soft skills to negotiate and close a sell-side or buy-side transaction in a structured and uniformed approach.

The trainer will discuss the main negotiation techniques, including reciprocity, BATNA and trading concessions. The participants will then role play in separate groups on an M&A case study with participants playing buyers and sellers. During the role play, the key clauses of SPA are discussed including the “lock-box” and “completion accounts” mechanisms, representations & warranties, etc.

Course MethodologyThe course will be delivered in a highly interactive, participative way, involving many activities and exercises, thereby ensuring maximum learning and integration of the learning points into the workplace, when the participants return to their daily roles.

Negotiation Personalities ■ Typical negotiation roles include:

• The leader is generally the negotiator with the most experience

• The good guy is the person with whom most of the members of the opposing team will identify

• The bad guy attempts to make the oppo-sition feel that the agreement could stall any minute

• The hard liner takes a tough line on everything

• The sweeper picks up and brings to-gether all the points of view expressed and then puts them forward as a single coherent case

■ Experienced negotiators know how to switch roles depending on the situation

Negotiation Process ■ All negotiations, consciously or uncon-

sciously, go through a number of logical steps

■ Stage 1: preparation and planning• Objective building and fact finding • Collecting the evidence (organising the

facts)• Stakeholder analysis (identifying the key

decision makers) • Position perception

■ Stage 2: enquire and test assumptions• • Build rapport & create a positive

environment• • Avoid hostility under all circum-

stances

■ Stage 3:propose• Let the other party make the first propos-

al• Deliver your proposal with little emotion • Never offer your final position at the start • Aim high whilst being reasonable

■ Stage 4: bargain• Trade concessions rather than just make

concessions • Avoid “irritators” and overly frequent

counter-proposals ■ Stage 5: close

• Avoid defend-attack spirals • Provide a “feelings commentary” • Avoid “argument dilution”

M&A Negotiation

■ The ten fundamentals principles to negotia-tion techniques• Set maximum and minimum objectives • Keep analysing the deal variables • Always aim high• Never give a concession – always trade it• Keep the whole relationship in mind• Know when to walk away from a deal• Know the negotiation process• Have a BATNA (Best Alternative To a Ne-

gotiated Agreement)• Select an effective negotiation strategy• Change your strategy if necessary but

never change your BATNA ■ The six rules of influence: reciprocation,

scarcity, authority, commitment, liking and consensus

■ BATNA• Before the negotiation, decide what you


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will do if nothing comes of the negotia-tion

• Unless you have a plan B, your anxiety may reach dangerous levels

• BATNAs set the threshold in terms of the full set of interests that any acceptable agreement must exceed

• Both parties doing better than their BATNAs is a necessary condition for an agreement

■ Zero sum fallacy• Zero-sum fallacy is a situation in which

a participant’s gain (or loss) is exactly balanced by the losses (or gains) of the utility of the other participant(s)

Final Case Study - Introduction

■ The participants are split into two groups, a buyer (a multinational company) and a seller (a private equity firm)

■ The key focus will be on negotiating and ex-ecuting deals smoothly and correctly to the best interest of the parties while arriving at an acceptable solution for both parties

■ The participants will role-play the M&A ne-gotiation in two rounds

Final Case Study – Round I

■ The seller has been running a competitive process and has received non-binding offers from several parties

■ One of the buyers is trying to obtain an exclusivity and has asked for a meeting with the seller to discuss their bid and the key clauses of the SPA.

Final Case Study – Round II

■ The interested buyer has been granted exclusivity and is negotiating the detailed clauses of the SPA including:• The price adjustment mechanism: locked

box vs. completion account• An earn-out or deferrred payment struc-

tures• The potential adjustments to working cap-

ital and capex • The representation & warranties and re-

lated indemnities• A pro or anti-sanbagging provision• A MAC clause


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Share Capital

Date: 8 Mar 2018Location: London Standard Price: £295 + VAT


Course Overview

As the title suggests, the course is a practical and interactive “How to” guide covering share capital procedures such as allotting shares or implementing buybacks (see full list below) as well as how to declare a dividend.

Throughout the course the trainer also poses the important question of whether and how defects in procedure can be fixed, recognising that often professionals are called in to advise when the legal procedures have not been adhered to. How to reduce the risk of director liability is also discussed in the context of recent case law.

This half-day course is designed for directors, company secretaries, lawyers, accountants or another business professionals working for or advising a company. It is suitable for all levels of experience as either an introduction or a refresher.

Participants will: ■ Be introduced to what is share capital and what is a share. ■ Get an overview of the concept of authorised share capital under the 1985 Companies Act and

the effect of its abolition ■ Have explained to them recent case law and what these cases tell us about directors’ liabilities

in relation to share capital procedures ■ Gain an understanding of which defective procedures can be ratified and which are void

■ What is share capital and what is a share ■ What is a share class ■ Common share classes (including preference

shares, growth shares, alphabet shares) ■ The concept of authorised share capital un-

der the 1985 Companies Act and the effect of its abolition

■ How to allot shares ■ Authority to allot and pre-emption rights on

allotment ■ The Doctrine of Maintenance of Share Capi-

tal and its effect on share capital procedures ■ An overview of how to alter share capital ■ Reduction of share capital ■ Redemption of shares ■ Purchase of own shares/ buybacks ■ Declaring a dividend:

• What is a dividend• The difference between final and interim

dividends• An analysis of what should go into board

minutes declaring a dividend ■ Which defective procedures can be ratified

and which are void ■ Recent case law and what these cases tell us

about directors’ liabilities in relation to share capital procedures

■ Subject to interest, some issues specific to

companies trading on UK stock exchanges.

The course materials include:

■ A full glossary of share capital terminology ■ Course Notes ■ Example shareholder resolutions relating to

share capital ■ Example minutes for an interim dividend ■ A schedule explaining the procedure for

share transfers (due to time constraints, share transfers are not discussed in any detail during this half-day course)

Note: this course does not cover the detailed tax or accounting aspects of share capital.


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Tax Issues in M&ADate: 23 May 2018, 02 Oct 2018


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Course Overview

This seminar considers the taxation implications of buying and selling businesses.

The viewpoints of the purchasers and vendors are both considered in depth, with the relevant taxes being covered with worked examples and a case study.

The seminar also covers the tax treatment of managers’ shares and tax issues relating to venture capital.

Advising the Purchasers

■ Purchase of shares or trade and assets? ■ Tax relief for goodwill and intangibles ■ Capital allowances considerations, particu-

larly fixtures in buildings ■ Taking advantage of trading losses in target,

including the new rules from 1 April 2017 ■ Financing the transaction – tax relief for

interest costs ■ Stamp Duty and Stamp Duty Land Tax con-

siderations

Advising Individual Vendors

■ Pre-sale planning ■ Sale of shares or sale of assets? ■ Maximising CGT entrepreneurs’ relief ■ The importance of “trading company” status ■ Tax treatment of consideration – cash,

shares, loan notes and earn-outs ■ QCBs or Non-QCB loan notes? ■ Tax implications of liquidation following the

sale of the trade

Advising Corporate Vendors

■ Pre-sale planning ■ Form of consideration – cash, shares, loan

notes and earn-outs ■ The substantial shareholdings exemption

and the new rules from 1 April 2017

HMRC Clearances, in particular

■ Section 138 TCGA 1992 re capital gains ■ Section 701 ITA 2007 – cancellation of tax

advantages

Tax Issues affecting employee shares

■ Taxation of employee shares including re-stricted securities

■ Impact on “earn outs” and MBOs ■ The use of share options to attract and retain

key staff ■ Availability of CGT entrepreneurs’ relief for

the management team

Tax Issues relating to Venture Capital

■ An overview of the Enterprise Investment Scheme (EIS) and Seed EIS

■ Qualifying companies and excluded activities ■ Conditions for the individual investor ■ Significance of being “connected” with the

company ■ The “Business Angel” rule ■ Venture Capital Trusts


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Corporate Finance Modelling MasterclassDate: 19-23 Feb 2018, 25-29 Jun 2018, 12-16 Nov 2018


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Course Overview

On days one, two and three the course covers the key elements of an acquisition or merger, from the initial stand-alone valuation of the target to the more complex accounting and modelling issues to be considered and finally analysing and assessing the value created by synergy benefits and leverage.

This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.

Participants will be led through a comprehensive review of analysis practices, from initial principles through to more advanced techniques that are used in transaction analysis.

As part of their work on this course participants model transactions based on real-life companies and scenarios.

On the last two days participants will cover the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques. Once the target business has been valued, participants will be introduced to LBO analysis and construct an LBO model.

The LBO modelling analysis will be developed by assessing the debt capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.

The participants will then cover more complex LBO instruments such as warrants and PIKs and how to calculate returns to each of the equity and debt providers.

Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the integrated model participants will then analyse various scenarios (management case, base case, payout case) to derive the optimum financing structure taking into account the financial constraints of each investor.

The participants will undertake an adjusted present value (“APV”) analysis to determine where value has been created in the LBO transaction, using an APV model and finally look at recovery analysis for a failed LBO transaction.

Case Study: The participants will use a variety of case studies and exercises during the last two days, based on publicly quoted and generic businesses.

By the end of days 1, 2 and 3 participants will understand: ■ Drivers on M&A ■ How to model integrated financial statements ■ How to use financial statements to value a business ■ How to model the balance sheet impact of transactions ■ How to incorporate synergies into modelling work ■ How to differentiate between financing and operating synergies ■ How acquisitions can be structured

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse leveraged acquisitions: ■ Building up from partially-complete models ■ Working with integrated financial statements ■ Developing the acquisition structure and modelling instruments ■ Running scenarios, iterating and optimising

Participants will be required to bring a laptop and a calculator to the course.


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Day 1

M&A model build up: the starting point ■ Modelling integrated financial statements ■ Model structure ■ Key forecast ratios ■ Sourcing and cleaning historic data ■ What makes a good model?

Modelling – integrating financial statements: participants complete a partially-developed financial model for a public quoted company which integrates P&L, balance sheet and cash flow. This company will be the target company used in the merger analysis

Modelling stand-alone valuation ■ Overview of valuation methodologies ■ What do investment banks do? ■ What methodologies could we use? ■ How should we define firm value? Equity

v.s. enterprise value ■ Calculating free cash flow before financing ■ Understanding and calculating WACC ■ Discussion – calculating WACC ■ Key issues with a two stage DCF valuation –

WACC and terminal value assumptions

Modelling - valuation: participants calculate the cost of capital and complete a DCF valuation for the target company, producing a stand-alone valuation as a cross check to the acquisition price

Day 2

Accounting for corporate transactions ■ Different types of transaction and how they

are modeled in practice ■ Consolidation accounting under the current

IFRS 3 an IAS 27 ■ Change of control triggers ■ Accounting for non-controlling interests

(“NCI”) ■ Accounting for disposals ■ Partial disposals – creating a NCI ■ Partial disposal – loss of control ■ Recent changes to acquisition accounting

under IFRS ■ Definition of control ■ Calculation of goodwill

Modelling: delegates complete a variety of transaction models incorporating all types of corporate transaction and calculate the effect of a transaction on a set of consolidated accounts in preparation to perform a merger analysis with the target business and an acquirer

Acquisition finance ■ Types of transactions and synergies ■ Availability of synergies and problems in

achieving them ■ Methods available for valuing synergies

■ Key differences between public vs. private deals, recommended vs. hostile bids

■ Choices for growth: acquisition vs. organic vs. joint venture

■ Defence strategies for target companies resist-ing a hostile bid

Case study: Participants calculate synergies for a case company

Day 3

Structuring acquisition finance ■ Once price has been agreed, how is it paid?

Cash vs. Shares ■ Financing choices for raising cash for an acqui-

sition: Debt vs. Equity ■ Calculating the success of a deal, accretion vs

value creation ■ The nature of equity instruments ■ The different risks and rewards accruing to

different parties ■ The impact of loan stock, convertibles and

preference shares on WACC ■ Calculating returns to key participants

Case study: Calculating accretion/dilution and the effect of hybrids on cost of capita

Merger modelling case study ■ Completing a merger model ■ Getting to DCF valuation for the combined

business ■ Combined WACC ■ Valuing operating synergies ■ Valuing financing synergies ■ Accretion/dilution analysis vs wealth creation ■ Sense-checking the output and adjusting the

capital structure

Modelling – bringing it all together: participants complete a complex merger model for an acquisition of the target business incorporating synergy analysis and varying capital structure. The transaction is analysed on an accretion/dilution analysis and a wealth creation/return on capital analysis

At the end of this session participants will have a working acquisition model incorporating a variety of different forms of transaction analysis

Course conclusion: best practice in transaction analysis ■ Participants will have improved their under-

standing of and have had experience of model-ling mergers and acquisitions from first princi-ples

■ Simple and clear reference Excel models - pro-viding participants with a platform for future internal modelling efforts and aiding decision making

■ Participants who, at the end of the course, understand the drivers on transactions and




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Course Contenthow transactions can be modified to suit the various parties

Day 4&5

Leverage Overview ■ Background to the LBO market

• Why do LBOs happen?• The agency effect• Main parties to a deal and their roles

■ Basic theory - The effect of leverage on firm value• Levered vs unlevered businesses• The value of the tax shield• Bringing in bankruptcy costs

The LBO process ■ Stand-alone value of the target – what price

to pay? ■ Modeling an LBO deal – does the deal meet

our returns? ■ Further analysis – assessing the debt capac-

ity ■ Determining the capital structure ■ Assessing the value creation

Valuing the target ■ Sourcing information – Historic and forecast

date ■ Analysing equity research

• Key attributes of broker analysis• Pluses and minuses of equity research

■ Building a DCF valuation using equity re-search• Which elements of research to use• Cross checking the research• Identifying errors in assumptions

■ Modelling the stand alone valuation• Which WACC to use• Underlying assumptions in a DCF• Different approaches to terminal value• The value driver approach – producing a

more realistic terminal value ■ Comparing and contrasting DCF and LBO

model structureCase Study I: Participants model the stand alone valuation of the target using historic data and equity research

LBO Modelling Overview ■ Key elements of an LBO model

• Comparing and contrasting DCF and LBO models

• Sources and uses of funds• Key drivers in an LBO model

■ From stand alone valuation to LBO analysis ■ The debt waterfall and initial capital structure ■ Assessing the IRR and initial optimisation of

the capital structure

Case Study II: Participants use the stand alone valuation of the target to complete

and LBO model

Assessing debt capacity for LBO financing ■ Financial interdependencies ■ Financing growth ■ Sustainable debt ■ Target debt capacity assumed in a WACC cal-

culation, debt capacity and interest cover ■ Debt capacity in LBOs ■ Debt capacity multiples in practice and credit

analysis• The rating agency ratios• Additional constraints in practice• “Max out” calculation – optimising the struc-

ture with further constraints Case Study III: Modelling the debt capacity of the target using multiple and credit analysis

Capital providers and their typical characteristics ■ Background to the capital markets and key

providers of finance ■ Current market conditions and ability to fi-

nance• The high yield market• Mezzanine finance• Deal multiples and exit conditions

■ Institutional and management equity ■ Traditional/new lenders ■ Senior tranche profiles

• A, B, C, RCF ■ Subordinated tranche profiles

• Second lien• Mezzanine (with/without warrants)• PIK• High yield bonds

■ More complex issues – warrants and options

Case Study IV: Modelling a more complex capital structure with various scenarios calculating exit value and IRR for each of the capital providers

Assessing value creation in LBO transactions – APV analysis ■ Key components of an APV valuation

• Unlevered value• Value of the tax shield• Direct and indirect cost of leverage

■ APV valuation and DCF valuation ■ APV valuation in a steady state ■ Calculating AP in a steady growth environment ■ Incorporating APV analysis in an LBO transac-

tion analysis

Case Study V: Where has value been created, modelling APV analysis for an LBO transaction




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Mergers & Acquisitions (M&A) CourseDate: 15-18 May 2018, 22-25 Oct 2018


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Course Overview

This four day M&A course covers all aspects of buying, selling, valuing private companies and management buy-outs.

The first day of this mergers & acquisitions course covers creating shareholder value through the pursuit of a successful M + A strategy has been shown to be a far from risk-free activity. Buyers overpaying or using inappropriate financing methods can lead to destruction of value and in some cases financial distress.

The second day of this mergers & acquisitions course covers the topics of the financial ratios used in comparable company valuation, creative accounting, the cost of capital, forecasting and discounting free cash flow. Exercises include the use of an Excel spreadsheet as input to valuing a business and, accordingly, attendees are requested to bring a laptop to the course.

The third day of this mergers & acquisitions course covers the practical steps that are required to plan, negotiate, and close a successful sale. Valuing the business to be sold and the effective presentation of the commercial attractions of the business are key elements, as are choosing the appropriate advisers and running a competitive auction.

The fourth day of this mergers & acquisitions course covers the principles and practicalities involved in arranging and negotiating a management buyout. In addition to the legal issues to be addressed, the use of bank debt and other financial instruments is examined in the context of developing a workable structure for the deal.

Day 1: The Drivers of Growth

The Drivers of Growth ■ Shareholder value ■ The company life cycle

• The importance of directors recognising the value curve

■ Risk and return• Relating risk to the life cycle phase of the

company / target ■ Product market growth and decline

• Evaluating niches, substitutes, value in innovation

REVIEW: Comparison and contrast of the lifecycle of three different companies, highlighting how success or failure with acquisitions has determined their fate

• ICI• Debenhams• GKN

Growth through Acquisition ■ Assessing the alternatives

• Investment• JV• Acquisition

DISCUSION: Advantages and disadvantages of each

approach ■ Determining the acquisition

• Market objectives ӹConsolidating a fragmented market ӹBuilding the value proposition

• Management issues ӹAssessing cultural fit

• Price parameters ӹKnowledge of comparative deals

• Opportunity cost ӹ Is it a “now or never” deal

REVIEW: The Ansoff Matrix, a handy way to categorise potential risks in acquisition strategies

■ Pitfalls to avoid • Realism of synergies

ӹRisks of prediction, cost and achievement• Accounting standards

ӹWho is the auditor, what principles are followed

• Judging forecasts ■ Scepticism rules

Commercial factors • Target’s history• Recurring revenue• Intellectual property


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Mergers & Acquisitions (M&A) CourseContinued

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• Customer list

CASE STUDY: Reviewing company information to arrive at a value, taking into account qualitative and strategic factors

The Acquisition Process ■ Establishing acquisition criteria

• Target size and affordability • Potential synergies• Market / competitor impact• Regulatory factors• Shareholder impact

■ Due Diligence • Investigation prior to offer

ӹPublic sources ӹPrivate sources

■ Verification• Contracts• Accounts• Pensions• Employee disputes• Litigation

CASE STUDY: Reviewing summary information on a company to determine which areas need investigation and who should have responsibility for the task

Structuring the deal ■ Earn-out / deferred consideration ■ Non-compete undertakings ■ Warranties and indemnities ■ Disclosure letters

Acquisition Integration ■ Success / failure factors ■ The importance of the integration team ■ Earn outs and accounting issues ■ Incentivising key managers ■ Establishing clear reporting lines

tax considerations

Day 2:Overview of the Process ■ Motives and objectives of the vendor ■ Which outcome is preferred

• Cash only• “sale with honour”• Management buyout• IPO

■ Timescale

Preparing the Company for sale ■ optimising the operations

• removing skeletons, resolving related

party conflicts ■ resolving accounting / audit issues

• tightening up provisions, write offs, stock obsolescence

■ clearing legal points• employee issues • customer / supplier disputes

■ choosing advisers ■ tax considerations

• the vendor’s position • company PAYE, corporation tax

Quiz: What are the top ten objective of a vendor Assessing the value of the business ■ Other factors

• IPR• Market share• Customer base• Niche products• Strategic value to a buyer

Exercise: Calculating the value of a business using different metrics

Initiating the Process ■ Choosing advisers

• Investment bank• Merger brokers• Accountants• Other

■ Agreeing the mandate• Fees

ӹRetainer, success, no go• Exclusions

ӹCompanies and territories• Time limits• Indemnities

■ Preparing key documents • Information memorandum • Support material

ӹConfidentiality undertakings, product information

• Due diligence pack ӹReasons for, use of vital data rooms

Management preparation • Confidentiality• Conflicts of interest• The “sale team”• Presentation material

The Sale Process ■ The cost / risk / timescale issues in

• A trade sale• Buyout




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• IPO ■ Trade sale approaches

• Public auction• Private auction• Bilateral negotiation

■ Organising an auction • Identifying the purchasers

ӹTiering prospects into probables, possi-bles, maybe

• Defining the deadlines ӹThe importance of realism

• Contact and confidentiality ӹDealing with large company buyers

• Judging the offers ӹWill a “no price” offer work?

• Conducting the second stage discussions ӹCompany and management visits

• Preferred bidder and exclusivity ӹHow long for exclusivity?

CASE STUDY: Reviewing an information memorandum on a company sale to assess: the value of the business, the most likely buyers

■ Sealing the deal• Earn-outs

ӹBridging the valuation gap• Warranties, disclosure letter

ӹBuyer / vendor conflict• Time limits, caps• Completion accounts • Comfort letters

■ Alternative outcomes• IPO, timescale• MBO, management conflicts• Post “exit” lock-in• Ongoing relationship

Day 3: Valuation Principles ■ Value to whom? ■ Price and intrinsic value ■ The risk / return trade off ■ Strategic risk

The Accounting Approach ■ Accounting measures of performance and

value ■ Problems of the accounting approach ■ Are profits relevant? ■ GAAP vs IFRS ■ Creative accounting

• How to find it • Recent examples

Review: Was the near collapse of Quindell inevitable?

Accounting Valuation Metrics ■ Asset and net asset valuations ■ Dividend-based models

• Dividend yield• Dividend discounting

■ Application and drawbacks of dividend mod-els

■ Earnings-based • Price / earnings ratios • P/E strengths and weaknesses • PEG ratios • Enterprise value

Exercise: Valuation of a business using different metrics

Comparable Company Valuation Issues ■ Is the comparability achievable?

• Accounting principles • Averages, medians, outlines • Listed vs private

■ Sustainability of earnings ■ Business model flexibility

Exercise: Project Oxford, using comparable company techniques to value a company for acquisition

Calculating the Cost of Capital ■ Assessing the cost of debt ■ Calculating the cost of equity

• The risk free rate• Equity premium • Beta

■ The weighted average cost of capital • The flaws in the capital asset pricing model • Alternative approaches

Exercise: Calculating the cost of equity and the weighted average cost of capital

The Cash Flow Approach to Valuation ■ The time value of money ■ Calculating the discount rate ■ Forecasting free cash flow

• Calculating FCF• Identifying value drivers

■ Terminal value

Exercise: Discounting free cash flow to arrive at a value per share Exercise: Project Media. Using an Excel spreadsheet and given assumptions to arrive at a value of a company that is an




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acquisition target.

Project Media II. Varying inputs, in particular the debt / equity mix of the acquisition financing, to consider the maximum price that could be paid for the target

Day 4: The Growth of Private Equity and Leveraged Buyouts ■ Academic rationale for the use of leverage

• Modigliani/Miller theory • Michael Milken’s research• Growth of shareholder activism

ӹReviving under performers• Changes in company law• The development of the European high

yield bond and securitisation markets

The Principles of Leveraged Finance ■ The use of debt to drive equity values

• Cash flow management ӹReducing debt to drive equity value

• Operational improvements ӹBuilding “need to have”

• Incentivisation of management ӹGetting rich together

• Cash-capture clauses

Exercise: Good or Bad LBO?

Discussion of recent transactions to see which ones the attendees would do, and what lessons can be learned about elements of success or failure

Structuring the transaction • Target IRR

ӹAssessing the return appropriate to the risk

• Assessing debt capacity ӹForecasting future cash generation

• Senior / mezzanine debt mix ӹ Judging asset values

• Forecasting exit values ■ Consideration of non-bank finance

• High-yield bonds ӹTerms and size of issue

• Second lien debt > Too much debt?

• PIK finance ӹSaint or sinner?

• Vendor loan notes ӹMaking the deal look good

Case Study: Based on information provided attendees are tasked with structuring the finance for an MBO. Answers are discussed to identify the critical elements in the financing

■ Legal elements• Warranties and indemnities

ӹ Investor protection• New Memo & Arts

ӹ Incorporating P.E. control elements • Tag along and drag along

ӹControl of the exit • Veto rights for private equity

ӹControl of management ■ Management

• Jensen and Meckling agency theory ӹWhy buyouts work

• The envy ratio ӹManagement incentivisation

• Agreeing the ratchet ӹCarrot and stick

• Good leaver / bad leaver provisions ӹCovering under performance

Exercise: Agreeing the terms of the envy ratio

Identifying and Closing a Good Transaction ■ Ideal company characteristics

• The three golden rules ■ MBO / MBI

• Assessing management strength ■ Meeting vendors’ expectations

• Structuring the deal ■ Avoiding conflicts of interest

• Recognising the risks of multi-layered financing

■ Due diligence• Investigation and verification

■ Tie-in with contract terms ■ Structuring the debt appropriate to the busi-

ness

Discussion: How to finance the acquisition of Manchester United. The Man U accounts are reviewed with the object of deciding how to finance its acquisition. Answers are compared to the actual result.

Exit ■ Control by P.E. house ■ IPO ■ Second round financing ■ Trade sale ■ The “living dead”




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Private Equity & Management Buy-OutsDate:18 May 2018, 25 Oct 2018

Location: London Standard Price: £625 + VATMembership: £500 +VAT

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The sale of companies to management teams backed by Private Equity investors, using a leveraged financing of the acquisition, has become an increasingly common feature of the corporate scene. Whilst appearing simple to arrange, there are complex elements to a successful transaction.

This course covers the principles and practicalities involved in arranging and negotiating a management buyout. In addition to the legal issues to be addressed, the use of bank debt and other financial instruments is examined in the context of developing a workable structure for the deal.

The Growth of Private Equity and Leveraged Buyouts ■ Academic rationale for the use of lever-

age• Modigliani/Miller theory • Michael Milken’s research• Growth of shareholder activism

ӹReviving under performers• Changes in company law• The development of the European

high yield bond and securitisation markets

The Principles of Leveraged Finance ■ The use of debt to drive equity values

• Cash flow management ӹReducing debt to drive equity value

• Operational improvements ӹBuilding “need to have”

• Incentivisation of management ӹGetting rich together

• Cash-capture clausesExercise: Good or Bad LBO?Discussion of recent transactions to see which ones the attendees would do, and what lessons can be learned about elements of success or failure ■ Structuring the transaction

• Target IRR ӹAssessing the return appropriate to the risk

• Assessing debt capacity ӹForecasting future cash generation

• Senior / mezzanine debt mix ӹJudging asset values

• Forecasting exit values ■ Consideration of non-bank finance

• High-yield bonds ӹTerms and size of issue

• Second lien debt ӹToo much debt?

• PIK finance ӹSaint or sinner?

• Vendor loan notes ӹMaking the deal look good

Case Study: Based on information provided attendees are tasked with structuring the finance for an MBO.

Answers are discussed to identify the critical elements in the financing ■ Legal elements

• Warranties and indemnities ӹ Investor protection

• New Memo & Arts ӹ Incorporating P.E. control elements

• Tag along and drag along ӹControl of the exit

• Veto rights for private equity ӹControl of management

■ Management • Jensen and Meckling agency theory

ӹWhy buyouts work• The envy ratio

ӹManagement incentivisation• Agreeing the ratchet

ӹCarrot and stick• Good leaver / bad leaver provisions

ӹCovering under performanceExercise: Agreeing the terms of the envy ratioIdentifying and Closing a Good Transaction ■ Ideal company characteristics

• The three golden rules ■ MBO / MBI

• Assessing management strength ■ Meeting vendors’ expectations

• Structuring the deal ■ Avoiding conflicts of interest

• Recognising the risks of multi-layered financing

■ Due diligence• Investigation and verification

■ Tie-in with contract terms ■ Structuring the debt appropriate to the

business Discussion: How to finance the acquisition of Manchester United. The Man U accounts are reviewed with the object of deciding how to finance its acquisition. Answers are compared to the actual result. Exit ■ Control by P.E. house ■ IPO ■ Second round financing ■ Trade sale ■ The “living dead


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Structuring & Negotiating Mezzanine, PIK, Second Lien And Unitranche

Date: 20 Feb 2018, 10 Jul 2018, 27 Nov 2018 Location: London Standard Price: £725 + VAT

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Course Overview

Credit markets continue to provide copious amounts of liquidity across the funding spectrum from senior debt through second lien, mezzanine and PIK-style instruments driven by traditional funding sources and a significant increase in capital formation from alternative lenders. Although unitranche continues to comprise the most popular offering from alternative lenders, these funds adopt an eclectic approach to credit and are willing to provide established junior products such as mezzanine and PIK either in conjunction with senior debt or to complement their unitranche offering.

The Second Lien market experienced a resurrection in July 2014 (after a nascent period post 2007) but, according to S&P, is expected to experience a renaissance in 2017, for a number of reasons. The appeal to borrowers is first, the ability to increase leverage from 2L to fund higher purchase price multiples; second, reduced public disclosure and need for credit ratings; third, lower pricing than senior/ mezzanine structures and finally, is easier to restructure in distress than high yield bonds. Lenders are keen to take the product as it provides higher margins than senior debt, includes some level of call protection, provides additional investment opportunities (given the relative dearth of senior paper) and is structured differently to first generation deals, so providing greater protection in distress.

Mezzanine continues to face pressure from other cheaper products (2L in larger deals and unitranche in smaller deals), Despite this, global mezzanine funds have raised very large amounts of capital over the last year (GSO, Highbridge, Prudential and Crescent together raised nearly $20 billion). Competition from competing forms of capital means it is less likely these funds will be deployed in entirely conventional structures so these lenders have had to evolve new strategies to deploy their funds although there remains demand for the traditional senior / mezzanine structure. Despite the decline in mezzanine issuance, mezzanine continues to exert a strong influence on other junior debt products as many direct lenders had their roots in mezzanine and have been willing to apply the practices in that market to direct lending (e.g. the use of PIK and warrants)

PIK itself continues to find a place in the sun for a wide range of purposes including LBOs and the €3.6 billion Schaeffler multi-tranche PIK in late 2016 (up-scaled from €2.5 billion) evidenced strong demand for that product notwithstanding the miserly pricing (275bps on the 5 year Euro). Many of these deals now tend to be issued in note, rather than loan, form. In current market conditions, PIK is expected to remain popular as lenders chase returns up the risk/reward curve.

European direct lending funds reportedly have c $17 billion of capital to deploy. Unitranche continues to be the most dynamic product in that market however the offering has splintered from the original-classical structures to more structured bespoke products embracing a wider range of more complex structures including dual unitranche, first-in/ first-out. Banks, unwilling to be left on the sidelines, have also proved willing to fund both the bank-led facilities as well as some of the unitranche itself. The recent £475 million unitranche financing Bridgepoint’s acquisition of Zenith illustrates that direct lending can compete with head-on high yield bonds whilst the recent redemption of Soho Houses’ high yield bonds, with a £275 million unitranche, reinforces that notion. The large amounts of dry powder available to funds coupled with stiff competition from the traditional senior/junior loans has compressed pricing so lenders have had to find innovative/alternative ways of deploying their funds. Despite this, the recent ECB leverage guidance is expected to hamper banks and boost direct lending in general.

Whilst junior debt offers attractive returns, this is not without risk and the lesson from the credit crisis is that these providers invariably ended up receiving little or nothing in distress (e.g. Imo Carwash, Stabilus). Against this background, junior lenders have sought ways to mitigate these risks and have been assisted by an updated LMA Intercreditor (2012). However, many, more sophisticated providers have sought other ways to improve their position, for example through the appointment of their own Facility and even Security Agents, although this is not without controversy.

This programme examines the range of junior debt loan products available in the market, their use and application, the typical terms and conditions, market pricing and returns. The program also considers the various techniques junior lenders can adopt to structure their credit ab initio (via Intercreditor issues), how they can monitor their credit thereafter (and have advanced warning of impending distress) and finally how they can maximise recovery in distress. The course is highly practical and interactive and will include case studies which will first, require participants to devise appropriate junior debt structures and second, to consider the various Intercreditor and other matters which can protect their position in distress.


A model will be provided in advance of the programme and participants will be required to bring a laptop to the course with that model loaded.


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Course Content

Introduction to the junior debt spectrum ■ Overview of the market ■ The role of direct lenders ■ Review of the various products

• Mezzanine• PIK, PIYC & Toggles• Second Lien• Unitranche

Structuring parameters – how much senior and how much junior debt ■ Typical approaches to gauging debt capacity

/ capital structure ■ What are the key criteria to consider

• Multiples vs Capital approach • Key ratios (covenants where relevant)

used to right-size the debt ■ How Jurisdiction can affect debt capacity

(and how to mitigate)

Types of Mezzanine: use and key issues ■ Main features of the mezzanine ■ European vs US vs Asian mezzanine ■ Warrantless mezzanine – return structure

• Fixed vs floating rate• Cash pay• PIK• Redemption premia – stepped vs linear

■ Other tools for achieving the target IRR• OID to enhance returns• Using Libor/Euribor floors• Fees• Call protection - hard vs soft call protec-

tion ■ Key issues for warranted mezzanine

• Key issues & pitfalls for warrantless mezz• Dealing with recaps & refinancing• The order of priority vis-a-vis PE loan

notes ■ Other variants of mezzanine

• Senior mezzanine• Junior mezzanine• Hybrid mezzanine

Second Lien ■ Use and application ■ Market trends / recent deals ■ Documenting the 2nd Lien - composite or

separate facility agreement ■ “Typical” terms, leverage, pricing and call

protection ■ Pros and cons of 2L vs unitranche, high yield

bonds ■ Other tools for achieving the target IRR

PIK (PIYC, PIYW, Toggles) ■ Pay-in-Kind (PIK) generally ■ Different types PIK

• PIYW• Toggle • PIYC

■ “Typical” terms, leverage and pricing ■ Call protection - hard vs soft call protection ■ Market trends / recent deals

Unitranche & direct lending products

■ The onward march of direct lenders in Europe • Market trends• Recent developments

■ Where and how its used ■ Review of different “unitranche” structures

• Classic product• Clubbed • Dual tranche • Structured • First out / last out

■ Interaction with bank led finance & impact on bank lenders

■ “Typical” terms & leverage ■ “Typical” pricing

• Cash coupon• PIK• Warrants

■ Other tools for achieving the target IRR ■ Leverage – how much and impact on returns ■ Call protection

• Why it matters to lenders• Hard vs soft call protection

■ Pros & cons vs other types of products• Senior / junior (mezz/2L)• High Yield Bonds

Intercreditor issues & Agreement Among Lenders (“AAL”) ■ Typical inter-creditor issues for junior debt

• Enforcement standstills• Turnover – why and where this matters• Option to purchase - Practical issues

■ Key issues in distress• Information rights• Why going on the Board may not help• Costs in distress• Valuation in distress (q.v. IMO Carwash)• Release of collateral (q.v. European Directo-

ries) ■ The role of the Agents - how and why it mat-

ters in distress• Appointing a separate Facility Agent• Appointing a separate Security Agent – key

issues to consider

Draft ECB Guidance on Leveraged Transactions ■ Which lenders are affected ■ Which deals are affected ■ EBITDA calculation ■ Ramifications for market players

Structuring & Negotiating Mezzanine, PIK, Second Lien And Unitranche





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Valuing A BusinessDate:17 May 2018, 24 Oct 2018

Location: London Standard Price: £625+VATMembership Price: £500 +VAT

Course Overview

Valuation of a business, whether in the context of investment or M&A, is central to the negotiation of a transaction. Methods of valuation vary and a fundamental difference exists between the accounting and cash-based approaches.

The course covers the topics of the financial ratios used in comparable company valuation, creative accounting, the cost of capital, forecasting and discounting free cash flow. Exercises include the use of an Excel spreadsheet as input to valuing a business and, accordingly, attendees are requested to bring a laptop to the course.

Valuation Principles ■ Value to whom? ■ Price and intrinsic value ■ The risk / return trade off ■ Strategic risk

The Accounting Approach ■ Accounting measures of performance and

value ■ Problems of the accounting approach ■ Are profits relevant? ■ GAAP vs IFRS ■ Creative accounting ■ How to find it ■ Recent examples

Review: Was the near collapse of Quindell inevitable?

Accounting Valuation Metrics ■ Asset and net asset valuations ■ Dividend-based models ■ Dividend yield ■ Dividend discounting ■ Application and drawbacks of dividend

models ■ Earnings-based ■ Price / earnings ratios ■ P/E strengths and weaknesses ■ PEG ratios ■ Enterprise value

Exercise: Valuation of a business using different metrics Comparable Company Valuation Issues ■ Is the comparability achievable? ■ Accounting principles ■ Averages, medians, outlines ■ Listed vs private ■ Sustainability of earnings ■ Business model flexibility

Exercise: Project Oxford, using comparable company techniques to value a company for acquisition

Calculating the Cost of Capital ■ Assessing the cost of debt ■ Calculating the cost of equity ■ The risk free rate ■ Equity premium ■ Beta ■ The weighted average cost of capital ■ The flaws in the capital asset pricing model ■ Alternative approaches

Exercise: Calculating the cost of equity and the weighted average cost of capital

The Cash Flow Approach to Valuation ■ The time value of money ■ Calculating the discount rate ■ Forecasting free cash flow ■ Calculating FCF ■ Identifying value drivers ■ Terminal value

Exercise: Discounting free cash flow to arrive at a value per share

Exercise: Project Media. Using an Excel spreadsheet and given assumptions to arrive at a value of a company that is an acquisition target

Project Media II. Varying inputs, in particular the debt / equity mix of the acquisition financing, to consider the maximum price that could be paid for the target

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Valuing Start Up And Pre IPO CompaniesDate: 22-23 Mar 2018, 7-8 Nov 2018

Location: London Standard Price: £1,350+ VAT Membership Price: £1,080 +VAT

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Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value companies which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the development stage at which the company operates.

The course covers companies at the early growth and start up stage, such as technology, biotechnology and any early funding stage business. The key challenges associated with such companies are discussed and the best valuation approach considered.

The course also covers pre IPO companies at the rapidly growing phase of development which, depending on the geographic location, may cover a wide variety of sectors. As well as discussing some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches such as decisions trees, simulations, scenario analysis and real option valuation. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken. Examples are provided to illustrate each issue. Participants will be required to bring a laptop to the course.

Overview of valuation approaches ■ Intrinsic valuation – traditional cash flow

techniques ■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value

created through optionality Other valuation issues ■ Assessing risk – the risky risk free rate and

other current valuation issues ■ The economic cycle – incorporating mac-

ro-economic factors into a valuation

Valuing early stage and start-up companies and sectors ■ A life cycle view of start-up companies

• Start-up companies in context ■ Characteristics of young companies and

sectors• The key challenges with start-up compa-

nies• Visibility – a key valuation challenge

■ Valuation issues – intrinsic value• How to value existing assets in a start-up• Cash burn and the effect on existing as-

sets• The future of the business – high growth

& growth phases• Assessing growth rates - the key compo-

nent of value• Adjusting risk for small fast growing busi-

nesses• Discount rates for pure equity financed

businesses• When to calculate terminal value• Reducing the dependence on terminal

value• Value of equity claims

ӹAssessing equity claims in a early stage business

■ Valuation issues – relative valuation• Problems with start-up multiple analysis• Determining the starting point – revenue

multiples vs profitability multiples• Which year? – Determining stability for

multiple calculation and techniques for “normalising” multiples vs the sector

Valuing a start-up or early stage business in practice ■ Main errors made in valuing early stage busi-

nesses • Macro vs micro analysis• Product success and market share• Bottom up approach to a valuation

ӹCapacity capability• Estimating and using different discount

rates ӹThe use of phased discount rates


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ӹDiscount rates as maturity approaches • Ensuring consistency in a valuation• Private and public multiples• Option to expand valuation

ӹHow optionality affects valuation

Valuing pre IPO companies ■ A life cycle view of pre IPO rapid growth

companies• The rapid growth company in context

■ Characteristics of growth companies and sectors• How are growth companies different?

■ Valuation issues – intrinsic value• How historic numbers are misleading• How asset life may develop in the high

growth phase• How existing assets differ in a rapid

growth business• Where the bulk of value is created by

a rapid growth company – the growth phase

• Capital intensity and the rapid growth business

• The development of risk during the growth phase

• The stage at which a terminal value should be calculated for a rapid growth business – the path to IPO

■ Value of equity claims• The differing equity claims in a rapid

growth business• Participation by different equity holders

■ Valuation issues – relative valuationPeer groups – private vs public companies• Finding similar growth businesses – differ-

ent sectors?• Risk measures – adapting a multiple analy-

sis for risk ■ Valuing a growth business in practice

• Main errors made in valuing growth busi-nesses

• Dealing with immature markets• Assessing product cycles• Ability to execute – the key driver

■ Valuing the operating assets through the growth phase• How operating asset lives develop in the

high growth phase• Ensuring consistency in a valuation• Reinvestment and growth• Assessing investment requirements – the

returns and reinvestment equation• Completing the valuation – combining re-

turns and risk in a model

Valuing Start Up And Pre IPO Companies


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Valuing a Pharmaceutical CompanyDate: 27 Feb 2018, 13 Nov 2018

Location: London Standard Price: £695 +VAT Membership Price: £556 + VAT

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Course Overview

If the business model of the modern pharmaceutical industry did not already exist, management consultants and business schools would surely have invented it as a fictional basis for exploring the challenges posed by a perfect storm of every conceivable risk and uncertainty.

It is perhaps doubtful whether investors, managers and analysts would have believed that any business model embodying such a perfect storm would be sustainable and therefore worth studying at all – were it not for the fact that in the pharmaceutical industry, real life really is stranger than fiction.

Nowhere are all the risks and uncertainties confronting the pharmaceutical industry more clearly or comprehensively exposed to view than in the process of valuation.

This one-day intensive workshop begins with an in-depth analysis of the pharma business model itself, and then explores in detail the theoretical and practical barriers to the application of the most widely employed valuation metrics and methods.

It locates common pitfalls, and shows how a judicious selection of ‘horses for courses’ can help us to establish at least a conditional range for possible valuations in different contexts.

The course is ‘intensive’ rather than ‘advanced’, in the sense that it is strongly interactive in tone and structure (Excel-based exercises figure prominently, especially in the second half), yet it assumes no more than a basic understanding of financial statements and of a few of the most widely used measures of financial performance and condition, such as return on capital and p/e ratio.

As the participants are being asked to ‘unlearn’ much of their previously unchallenged conventional wisdom, those who come to the table with less ‘inherited baggage’ might even have an advantage!

Review of the pharma business model, with copious illustrations ■ Long, unpredictable and variable life-cycles of

individual products, from discovery, through pre-clinical and clinical development, to launch and eventual patent expiry

■ Low correlation in timing and amount of costs and revenues

■ Imperfect diversification of product portfolios (in terms of product numbers, sizes, types, and stag-es in life-cycle)

■ Exposure to a wide range of long-term uncon-trollable factors – demographic, epidemiological, scientific (‘looking for needles in haystacks’), political, geopolitical and economic

■ Uncomfortably close and unusually complex relationship with government (healthcare policy and priorities, regulation, pricing regime, overall demand)

■ High risk of unforeseen technical failure, and costly and protracted lawsuits

■ Little freedom to plan for long term, in face of constant threat from opportunistic predators

Overview of conventional models: their general strengths and weaknesses, when they work best – and when they work least well ■ Primary models

• NPV based on Free Cash Flow (FCF)• Comparables and benchmarking• Book-based models• Market multiples

■ Secondary refinements• Sensitivity and scenario analysis• Decision tree analysis and real options• Monte Carlo analysis

How conventional valuation models are challenged by the pharma model, as for instance: ■ Data samples and populations (e.g. on overall

amounts and timings of costs and revenues) too small, heterogeneous and idiosyncratically distrib-uted to be statistically useful

■ Conventional measures of mean and dispersion inoperable

■ Genuine comparability, between companies, be-tween deals, and between therapies, unduly elusive in practice

■ Conventional modelling techniques unable to ac-


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commodate shifting levels of risk through the product life-cycle: inapplicability of standard CAPM and dividend-based model of expected returns

■ Lack of informed market consensus on criteria for analysis

■ Chronic tendency towards optimism in manage-ment commentary, e.g. on value of pipeline, stage of development, timing of launch and subsequent success in market

■ Shortcomings of the accounting regime in:• capturing relevant costs and accommo-

dating mismatch in timing of costs and revenues

• reaching consensus on intangible assets• resolving problems of business combi-

nations Finding a way forward ■ General principle: do as much work as possible

before confining one’s brain in the fixed con-fines of an Excel spreadsheet!

■ Strategic analysis of the relative strengths and weaknesses of the business to be valued and of the sector(s) in which it operates, using a standard framework such as Porter’s Five Forc-es

■ Bottom-up approach: refining institutional FCF into product-specific FCFs, using• Bottom-up estimates of revenue and costs

based on demographic, epidemiological and other factors:

• Product-specific rNPVs (risk-adjusted NPVs), instead of entity-wide NPV, with individual discount factors calibrated according to (i) costs, (ii) revenues and (iii) risks appropri-ate to individual major product characteris-tics at each stage of its life-cycle

■ Top-down approach: sense-checking the dif-ference between (a) market EV and (b) sum of the product rNPVs from the bottom-up ap-proach, by seeking possible reasons for• positive differences (e.g. pipeline, well-

struck balance between diversification and internal synergy, bargaining power in M&A market)

• negative difference (e.g. accident-prone management, above-average vulnerability to competitors, predators and government)

Bringing it all together – 1: Working with Excel

Basic tips and tricks for constructing an Excel-based valuation that is at once comprehensive, coherent, consistent and flexible

■ The template must be appropriate to the case, facilitating comparison with comparable cases and highlighting differences with contrasting cases

■ Line and column descriptions must indicate re-lationship between values: “Go and look at the formulae” is no way to treat grown-up readers

■ Assumptions (and variations of assumptions) must be highlighted

■ Sources and relative reliability of different data inputs must be highlighted

■ Top-level results must be summarised on front sheet, and indicate not only a point value but a range of values, as well as an indication of the principle parameters for the range

Bringing it all together – 2: Constructing a pharma valuation

Participants will work in small groups on a comprehensive valuation exercise under the close supervision of the trainer, who will help resolve individual problems while acting as a channel for sharing each group’s insights and experiences with the class as a whole.

The workshop concludes with presentations by one or more of the groups to the class as a whole, in an exercise designed not only to give them self-confidence in their technical skills but also to enhance their ability to communicate their findings to colleagues.

What our clients are saying about the course

“Course material were interactive and independent”

”Interesting practical insight, discussions and examples”

”Case study very relevant”


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Valuing A Technology CompanyDate: 26 Feb 2018, 12 Nov 2018


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This course is ideal for those who are dealing with technology companies and need to gain an appreciation of their worth.

It focuses on the different techniques that can be deployed in assessing these companies, especially the real options approach which has achieved a wide degree of popularity. The course is also useful to those who are involved in any type of corporate transaction for technology companies from an advisory perspective.

Participants should be familiar with discounted cashflow techniques and have at least a basic understanding of business valuations.

Participants will be required to bring a laptop with a CD-Rom or USB connection to the course.

Defining the Problems ■ Differences between traditional corporate

valuation and technology valuation

■ Handling data problems that emerge with technology companies

■ Lifecycles and corporate cashflows ■ Review of DCF valuation techniques and

applications to technology businesses

■ Valuing early stage development businesses

Applying the DCF Model to Technology Companies ■ Estimating cashflows and expenditure pat-

terns ■ Evaluating the expected growth rate ■ Links to corporate strategic models ■ Combining growth rate with investment

intensity and return on investment

■ Applying the appropriate discount rate and varying the rate over time

■ Evaluating the stable growth stage and cal-culating the terminal value

■ Inherent problems of using the DCF model to value technology companies

Using Multiples in Technology Valuation ■ Importance of using EBITDA if possible, Us-

ing revenue multiples ■ Examining the broad range of possible com-

parisons ■ Using statistical analysis to improve the

multiple comparison ■ Pitfalls in using multiple approach for technol-

ogy companies

Using the Real Options Approach ■ The problems inherent in using the NPV/DCF

approach to valuation

■ Defining real options – patent rights, expan-sion option, abandonment option

■ Why real options are more applicable to tech-nology companies

■ Basics of real option valuation using binomial trees and a lattice approach

■ Financial option pricing (Black Scholes) and the link to real options

■ Management options and the value of strategic flexibility

■ Using real options approach to improve the un-derstanding of technology valuations

What our clients are saying about the course

“Covers price vs value”

“A proactive course - helped challenge traditional methods & point out common

errors”

“Good discussions regarding the implications of difference techniques”


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Winning Corporate Finance BusinessDate: 16 May 2018


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■ ■

Why is pitching important? M&A is a competitive and crowded industry. Many advisers may be credible for any particular transaction: there is a real challenge for candidate advisers to differentiate themselves. Whether the client making the selection is inexperienced (such as an owner-manager) or a frequent buyer/ seller (such as a private equity firm), it can be hard for the client to identify the ‘right’ firm to execute the deal for them.

M&A, whilst challenging to execute, is popularly seen as lucrative, bringing high fees – but winning an M&A mandate is an intense process which can call for just as much effort as the transaction itself. Pitching is highly competitive and, done well, requires for a considerable amount of bespoke preparation.

In all areas of business, there are good pitches and bad pitches. What makes the difference? Learn about how what happens ahead of a pitch shapes the pitch meeting itself and can have a major impact on the outcome. Focus on areas to highlight in the pitch document, and the conduct of the pitch meeting itself. In addition to relevant expertise, success calls for considerable time and effort, astute judgement, strong relationship building and great teamwork.

Participants will:

■ Study the whole process from first contact with a potential client to winning the mandate ■ Focus on how to initiate and develop dialogue with a potential M&A client ■ Gain an understanding of all the tools which can be used to build the client relationship ■ Appreciate the best way to position and leverage your M&A expertise, ahead of a pitch meeting ■ Get to grips with the minutiae of preparing a pitch document ■ Explore what a good pitch document looks like ■ Develop ideas on the conduct of the beauty parade itself ■ Discuss what may influence decision making on the part of the acquiror/ vendor ■ Come away with a broader appreciation of how to position for and win corporate financial advisory

work

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Part one – before the pitch

■ Appointing an M&A adviser: the beauty parade as the tip of the iceberg

■ Who is or may be a seller? Is this transac-tion good business for our firm?

■ How to identify and qualify the opportunity ■ Understand the client: ■ Why are they selling (and why now/ soon) ■ Consider what they will most need from

their M&A adviser ■ It’s not just about the pitch; what can be

done ahead of time? ■ Focus on stakeholders. Who may influence

the decision?

■ Relationship building and positioning: how to develop this

■ Do your own research - a key potential differentiator:

■ Developing insight and understanding of the client

■ Gathering relevant information ■ Proprietary analysis ■ What is our firm’s relevant sector and

transactional expertise? ■ Ways of advancing your client relationships ■ Why are we the best M&A adviser? Building

competitive advantage: where can you aim to get to, pre-pitch?

■ Pitching started yesterday: anticipating the formal invitation


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Part two – the pitch document

■ A good start is vital: ■ Identify your project team – bring together

M&A and any other relevant disciplines ■ Brainstorming the content of the document ■ Ensure you are fully aligned to the ITT and

any process rules ■ Agree a clear roadmap from the outset: ■ Format and style of the document ■ Agreeing the fundamental messages ■ A detailed timetable ■ What areas are normally addressed in an

M&A pitch document? ■ Key areas to cover – allocating responsibil-

ities and ownership ■ Balance and perspective: ■ It’s not just about your firm, it’s about the

client’s business and deal ■ A customised document - no sausage ma-

chines! ■ What other advice may the client need? ■ Ensure you have all relevant areas of ex-

pertise covered ■ The importance of understanding how the

document may be used – and how this shapes content and presentation

■ Examples of smart content ■ Don’t undersell- presenting the wider team

and the whole firm’s relevant capability ■ Logistics - should never be overlooked!

Part three – the beauty parade

■ Who should attend? What is the optimal mix of attendees?

■ Ensuring correct expectations for all parties ■ Know the rules (timing, format) and cli-

ent’s expectations as to how you will en-gage and the ground to be covered – work to them

■ Use of the pitch document vs. stand-alone session• Visual aids?

■ What constitutes effective preparation?• Dry runs, full rehearsals, independent

challenge ■ The rules of good presenting

• A delivery which helps the client keep track and reinforces messages

• Personal conduct• Team behaviour in the meeting – how to

work together

■ Engaging with the client’s side – how to encourage dialogue

■ Key areas of focus• Be clear what you want to achieve

from the meeting, and what key mes-sages you want to convey ….

• …. but retain flexibility to adapt how you get your message across

■ Key messages to conclude: What is the optimal number?

■ Never leave the room without feeling you have given everything you wanted to share

Conclusion

■ What may happen next? ■ An understanding of client decision-mak-

ing ■ The fee negotiation ■ Exercise: preparing a pitch for two differ-

ent clients

Exercise

You will be presented with two very different types of client and asked to suggest what, in your view, should be emphasised in your approach to them as a potential client – both beforehand and in the pitch itself.

Followed by discussion of these suggestions, broad-ranging questions on the session, and concluding remarks.





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Tax Issues Affecting MBOsDate: 20 April 2018

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Location: London Price: £350 +VAT Membership Price: £280 + VAT

This course is intended to give those involved in MBO transactions an understanding of the taxation traps and planning opportunities that the tax legislation produces. The course will look at issues for the target business, those providing funding and, in particular, the management team. The potential charges under the employment-related securities legislation are particularly important for the latter.

As well as explaining the tax rules, importance compliance aspects, such as obtaining (where possible) HMRC clearance in advance of the transaction, will be discussed.

Tax issues affecting the target business ■ Acquisition of trade and assets or shares

in target? ■ Possible tax charges if target company

acquired ■ Preserving trading losses

• Problems caused by anti-avoidance rules

Taxation of Venture Capitalist/ Private Equity Funding ■ Tax treatment of debt and equity ■ Problems with “stranded interest” ■ Taxation of share buy-backs ■ Taxation of share sales

The tax treatment of managers’ shares ■ Interest on money borrowed to buy

shares ■ Capital gains treatment on eventual sale ■ Availability of relief under Enterprise In-

vestment Scheme and Seed EIS ■ Potential income tax charges under em-

ployment-related securities legislation ■ Complying with the conditions in the

memorandum of understanding between BVCA and Inland Revenue

Structuring ratchets to avoid income tax charges on the manager shares Using EMI options to recruit, retain and incentivise key staff ■ Qualifying companies ■ Conditions to be satisfied by employees ■ Exercise conditions, forfeiture, restric-

tions ■ Disqualifying events



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Due Diligence In Corporate Finance Transactions

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Course Overview

Due diligence is, more than ever, central to transactions. If it were ever a box-ticking exercise, it certainly is not one now. Even on a small to medium sized transaction (£20million or so) due diligence costs can exceed £500,000. Buyers know they need due diligence, but do they know how to get best value for it? A well-informed buyer will think hard about where due diligence should focus, and the scope of the diligence services it needs.

The main advisers - financial and legal - on transactions have a role to play too. The importance of directing the due diligence enquiries, and correctly interpreting the findings, goes to the heart of any deal. Good advice to the client will add value and help ensure a successful outcome.

For their part, many diligence providers have a high sense of commercial awareness. They welcome the chance to discuss key findings with their clients and are consistently trying to make their reports commercially focused, feeding directly to the value of a transaction.

The course is therefore designed to help clients and their advisers to understand how to approach the due diligence aspects of a transaction. It is no substitute for the role of diligence professionals, but it will give attendees a better understanding of what due diligence entails, how to engage with diligence providers, and how to manage the due diligence process. Starting with an explanation of due diligence itself, the course considers how due diligence is procured, tours the growing range of areas covered by due diligence, and concludes by explaining how the due diligence findings link in to other areas of a transaction.

There will be a strong emphasis on practical, real-world issues throughout, with key messages and learning points underpinned by examples from the trainer’s extensive experience.

The course is designed for those who may need to use due diligence in the course of these work, with particular reference to mergers, acquisitions and related financings. We will cover: ■ The origins and purpose of due diligence ■ The ever-widening scope of diligence work ■ Providers and delivery models ■ How due diligence fits into a range of transaction processes ■ The ways in which due diligence affects transaction outcomes ■ A sense of what due diligence may cost

The intention is to develop understanding, awareness and sophistication on the part of due diligence buyers and users.

Introduction ■ What is due diligence? ■ A due diligence defence ■ Suppliers ■ Users (bank lenders, private equity firms

and other providers of finance, as well as companies on behalf of their investors/ shareholders)

■ Who commissions and who pays ■ Liability of due diligence providers

Due diligence in the M&A timetable ■ The traditional process, with all buyers un-

dertaking independent due diligence

■ A process underpinned by vendor due dili-gence, prepared ahead of wider marketing

■ The pros and cons of VDD ■ Smart preparation: Adding value through

pre-transaction due diligence/ Sale readiness review

■ Phasing: the various stages of data release ■ The evolution of data rooms ■ Interaction with other areas of information

provision such as teaser, information mem-orandum, tours/ site visits, management presentations

■ Legal status of diligence reports ■ Due diligence from the target’s perspective;

managing the subject of the investigation

Date: 5 June 2018 Location: London Price: £675 +VAT

Membership Price: £540 + VAT


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The key areas of due diligenceAn overview of each area, reviewing the key areas of investigation and typical/ potential findings, including:

• Financial• Tax• Legal• Contracts• Plant and equipment• HR• Market, commercial and strategic analy-

sis• Brand strength• Customer referencing• Property and land use• IT• Operational analysis, e.g. benchmarking• Insurance• Pensions• Regulatory compliance• Reputational enquiries• People/ psychometric/ behavioural• Patents/ IP• Competition risk• Environmental• Resources/ reserves• Synergies analysis, costs and benefits• Separation analysis - Carve outs and

proformas• Reciprocal due diligence - on a buyer

where part of the consideration is in shares

■ Discussion will include key areas of focus, examples of discoveries and potential risk areas

■ Presentation of key findings

Vendor assistance services ■ Pre-sale preparation ■ Cleaning up businesses pre-sale ■ Financial presentation in a form suitable for

a transaction ■ Scope for value creation

How due diligence integrates with the definitive agreements and goes to value ■ Heads of agreement ■ The legal framework - SPA and disclosure ■ Representations and warranties ■ Locked box or completion accounts ele-

ments – net debt and working capital - final pricing

■ Potential for price chips ■ Earn-outs/ contingent consideration ■ Retentions and escrows ■ Indemnity

Capital markets transactions ■ Prospectus and sponsor’s role ■ Long form report ■ Working capital review ■ Consultants’ reserve reports ■ Statement of Benefits

Case studies

The course will include a range of case studies such as: ■ A classic financial due diligence package ■ Fuel delivery business - environmental due

diligence ■ Tax discoveries around loan note interest ■ Contracting business - due diligence to shape

the outcome on cash and working capital ■ Specialist retailer - commercial due diligence ■ Merged businesses - potential cost savings ■ Aerospace supply chain - strategic and com-

mercial ■ Petroleum consultants - assessment of oil &

gas reserves ■ Failed transactions - The risks and conse-

quences of limited/ incomplete due diligence

Conclusion ■ Relating costs to value ■ Trends in due diligence ■ The place of due diligence in your transactions ■ Managing due diligence providers ■ What buyers and other advisers should look

out for





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Accounting for Business Combinations (M&A) Training Course

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Course Overview

This intensive course is designed to give a comprehensive insight into the principles and practice of IFRS accounting and reporting for the full range of transactions under the general umbrella of M&A. In addition to transactions where there is a full change of control, it also considers transactions involving joint control and ‘significant influence’ (i.e. associate status) and transfers among each of these categories. Transactions are considered from the perspectives of all participants (i.e. selling and target entities as well as buyer).

The course will reflect the latest state of the following recently introduced or amended accounting standards and of emerging practice with regard to each of them:

■ IFRS 3 – Business Combinations ■ IFRS 10 – Consolidated Financial Statements ■ IFRS 11- Joint arrangements ■ IFRS 12 – Disclosure of Interests in Other Entities ■ IFRS 13 – Fair Value Measurement ■ IAS 27 – Separate Financial Statements ■ IAS 28 – Investments in Associates and Joint Ventures

The course will also offer a preview of the principal relevant changes resulting from the impending replacement of IAS 39 Financial Instruments: Recognition and Measurement by IFRS 9 Financial Instruments, as well as an insight into the main differences between IFRS as published by the IASB (‘full IFRS’) and the UK’s recently introduced FRS 102 and associated regulations (The New UKGAAP).

The course is interactive in approach and participants are encouraged to bring their own experience (and problems) to bear on group discussions and on the many (almost exclusively real-world) case studies and exercises with which the course is illustrated – and enlivened.

The concept of control

■ Parent and subsidiary undertakings ■ Special purpose entities and arrangements ■ Quasi-subsidiaries

• Review of key concepts for business combinations and associated transactions: principles and applications ■ ‘Control’ ■ ‘Significant influence’ ■ ‘Joint control’ ■ ‘A business’

Accounting for acquisition and disposal of full control ■ Deciding whether the subject is a business or

a collection of assets: pros and cons of each ■ Identifying the acquirer, the seller and the

date of acquisition

■ Identifying all assets and liabilities (including previously unrecognised intangibles)

■ Establishing fair values ■ Treatment of transaction costs ■ Calculating goodwill (also negative goodwill) ■ Acquiring control in stages ■ Treatment of deferred and contingent consid-

eration ■ Provisional and final valuations ■ Relinquishing control in stages ■ Transitions to and from associate or JV status ■ Accounting for acquisition in standalone ac-

counts of parent ■ Consolidation procedures

• Adjustment to parent company accounting policies

• Adjustment to fair values• Elimination of intercompany items• Non-controlling interests: share of net as-

sets or ‘full goodwill’ basis?• Allocation of goodwill across CGUs for fu-

ture impairment reviews• Treatment of foreign currency translation


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gains and losses• Special cases – 1: Parent and subsidiary

with different functional currencies• Special cases – 2: Exemption for con-

solidation for assets held for resale• Special cases – 3: SPVs – consolidate or

not? Does accounting treatment neces-sarily follow regulatory treatment?

■ Disclosures:• Initial disclosure of the transaction itself• Subsequent disclosures, e.g. related

party transactions

Accounting for equity method investments – associated companies

■ Applying the ‘significant influence’ and ‘joint control’ criteria in practice: some ‘counter-intuitive’ cases

■ Equity accounting for associates in consoli-dated financial statements• Establishing the initial share of net as-

sets• Goodwill (initial and after subsequent

review)• Changes in value of share of net assets:

distributions• Elimination of proportion of intercompa-

ny profits and losses ■ Special considerations for accounting for

joint arrangements:• Joint operations or joint venture?• Equity accounting for joint venture (no

more ‘proportional consolidation’) ■ Transitions to and from associate/JV status

Some special topics

■ Secondary impact of transactions on eps, banking covenants, investor ratios and public perceptions

■ Impact of IFRS 13 Fair Value Measurement on initial accounting and on subsequent impairment and impairment reversal re-views

■ Hedging / hedge accounting for M&A transactions (under IAS 39 and IFRFS 9)

■ Hedging / hedge accounting for ongoing net investment in foreign undertaking (un-der IAS 39 and IFRS 9)

■ Overview of principal changes in IFRS 9 as regards accounting for ‘portfolio’ equity instruments:• introduction of new ‘Fair Value through

OCI’ category• new enhanced disclosure requirements• Exemptions available for ‘investment

entities’ and for sub-groups





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Advanced Financial Analysis TrainingIn-House

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Course Overview

Understanding financial statements and forecasts used to analyse and value businesses is fundamental to the role of any analyst or investor. Unfortunately companies at times have incentives to manipulate their reported results (for better or worse) that are not aligned with investors in the business.

This course helps the participants to understand firstly, the main types of manipulation that take place in practice (including recent public company examples), then looks at how these types of manipulation can be identified and an assessment of the quality of a company’s financial reporting arrived at through the use of analytical techniques.

The course deals with numerous accounting issues and provides the latest state of accounting under IFRS and US GAAP. This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work.

The approach has been designed to equip participants to put key concepts into practical use immediately.

By the end of this course participants will understand:

■ The key methods used to manipulate financial statement and forecasts ■ How to analyse historic financial statements using advanced ratio analysis to assess the quality

of the financial reporting and the financial health of the business ■ How to analyse and assess financial forecasts using different accounting issues

Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse financial models:

■ Building up from partially-complete models ■ Working with integrated financial statements ■ Running scenarios, iterating and optimising

Each participant should bring a lap top with USB port to the course to facilitate modelling work

Day 1Accounting overview – where manipulation and fraud commonly take place

■ Conditions that may result in accounting manipulation• Incentives and pressures to manipulate• Opportunity• Attitude of management

Case study – Analysing the conditions for fraud – Enron

Common forms of manipulation and fraud – income statement

■ Revenue recognition issues• When is a sale not a sale• Accounting rules governing revenues• Earning revenue – principal or agent?• The problems with long term contracts

■ Abnormal sales growth, the Symbol effect ■ Revenue recognition red flags

Case study – The participants analyse a case company’s accounting for revenue and suggest adjustments to correct manipulation

Case study – Symbol Inc


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■ From revenue to EBIT• Increasing income from one off events• Misleading classifications• Capitalising interest

■ Manipulation of cost of goods sold• Cost deferral and impairments

■ Inventories, growth vs sales and valuation issues

■ EBIT manipulation red flags

Case study – Enron red flags

■ Other income statement issues ■ Shifting current expenses to a later period

• Identifying capitalisation issues

Case study – Thomson Research

■ Techniques to hide expenses or losses ■ Shifting current income to a later period ■ Shifting future expenses to an earlier period

Case study – Xerox

Day 2

Evaluating the quality of financial reporting – ratio analysis

■ Quantitative tools used to assess financial reporting quality

■ Dupont analysis• ROE and ROCE analysis• Extended Dupont analysis

■ Further ratio analysis• Working capital and asset based analysis• Assessing divisional performance• Credit based analysis • Altman z scores• Accruals based analysis

Case study – The participants analyse the case study company and produce the first set of ratios to assess the quality of the financial reporting to identify where the accounts may have been manipulated

Case study – The participants analyse a case company’s accounting for further income statement issues and suggest adjustments to produce a “clean” set of historic numbers

Common forms of manipulation and fraud – balance sheet

■ Long life assets• What does an asset cost?

■ Amortisation and depreciation issues• Asset lives and depreciation rates

Case study – The participants analyse a case company’s accounting for PPE and Intangibles for manipulation

■ Off balance sheet financing• Accounting for leases – the operating lease

disappears• Treatment of leases for valuation purposes• Liability calculation• Balance sheet adjustments• Treatment effects on financial ratios

■ Pension accounting – income statement and balance sheet issues• Accounting for pensions• Correct allocation of costs – EBIT or not• Which liability and effect on valuation• Treatment effects on financial ratios

Day 3

Common forms of manipulation and fraud – balance sheet (continued)

■ Financial instruments – recognition and valu-ation• The after effects of the financial crisis – new

accounting rules for financial instruments• Fair vs historic cost – assessment and ef-

fects on valuation• Treatment effects on financial ratios

Case study – The participants analyse a case company’s accounting for various balance sheet items and suggest adjustments to correct manipulation

■ Foreign currency issues – translation and transaction effects• Which currency to use• Calculation of translation effect• Implications for valuation• Treatment effects on financial ratios

Case study – The participants analyse a case company’s accounting for various balance sheet items and suggest adjustments to correct manipulation




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Common forms of manipulation and fraud – cash flow

■ Picking up the trail – earnings vs cash ■ Operating vs other cash flows – improving

cash conversion ■ Manipulating working capital for cash flow

• Receivables• Payables

■ Accounting for cash and the quality of cash holdings• Does the cash exist?• Polly Peck and Cyprus

Case study – The participants analyse a case company’s accounting for various cash flow statement items and suggest adjustments to correct manipulation




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Banks Financial Statement Analysis - BasicIn-House

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Course Overview

This training allows participants to develop an initial understanding of banks’ financial statements. Specifically, through a mix of lecture, case studies and Excel modelling, the workshop will equip participants to:

■ Review the accounting of banks’ financial statements; ■ Understand the banking book and introduce the new IFRS 9 loan loss impairment methodology; ■ Analyse the accounting treatment of financial instruments including amortised costs, FVTPL (Fair

Value though Profit & Loss) and FVTOCI (Fair Value through Other Comprehensive Income); ■ Review IFRS shareholders’ equity and the reconciliation to CET1 (Common Equity Tier I), Tier I

and Total Capital; ■ Analyse the key banking ratio including growth, performance, asset quality, liquidity and capital

ratios.

Session 1 Introduction to Financial Statement Analysis for Banks ■ Balance sheet ■ Income statement ■ Cash flow statement ■ Statement of change in shareholders equi-

ty/comprehensive income

Case Study #1: participants will review Barclays’ financial statements

Session 2

The Banking Book

■ Types of banking books• Mortgages• Credit cards• Personal loans• SME loans• Corporate loans• Syndicated loans

■ On balance sheet or securitised ■ Amortised cost methodology ■ Credit Issues and collateral ■ Non-performing loans ■ Introduction to loan loss impairment under

IFRS 9 and the three stages

Session 3

Financial Instruments

■ Amortised Costs ■ Fair value through Profit & Loss (FVTPL) ■ Fair value through Other Comprehensive In-

come (FVTOCI) ■ Accounting treatment determined by (i) busi-

ness model (ii) nature of cash flows ■ Decision tree to decide on classification of

financial instruments

Case Study #2: participants will be presented with a few financial instruments and will classify them in their relevant categories

■ Balance sheet and P&L calculation of a bond at amortized cost• Based on the Internal Rate of Return (IRR)

of future cash flows• Treatment of fees in the IRR calculation

■ Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI• Effective interest rate method for interests

(same as amortised costs)• Unrealised gain based on NPV at current

yield of future cash flows

Case Study #3: participants will compute on Excel the impact on balance sheet and P&L of a bond under amortised costs and FVTPL

Session 4


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Shareholders’ Equity

■ IFRS shareholders’ equity and treasury shares

■ Common Equity Tier 1 (CET1), Tier 1, Tier 2 and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, de-ferred tax, changes to investment portfo-lio, etc.

Case study #4: Review Barclays’ Shareholders Equity to Tier I reconciliation

Session 5 Bank Ratios

■ Growth ratios• Loans and deposits• Assets and RWAs• Revenues and costs

■ Performance ratios• Net interest income, net interest expense

and net interest spread• Cost to income ratio• Return on equity, return on assets, return

on RWAs ■ Asset quality

• NPL ratio• NPL coverage

■ Liquidity ratios• Loan to deposit• Liquid asset to short-term wholesale fund-

ing ■ Capital ratios

• CET1 ratio• Total capital ratio

Case study #5: Compute all ratios on Barclays’ latest financial statements




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Banks Financial Statement Analysis - AdvancedIn-House

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This training allows participants to build a structured approach to the analysis of banks’ financial statements. Specifically, through a mix of lecture, case studies and Excel modelling, the workshop will equip participants to:

■ Review the accounting and valuation of banks’ financial statements; ■ Understand the banking book and the new IFRS 9 treatment for loan loss impairment using the

expected loss methodology; ■ Analyse the accounting treatment of financial instruments including amortised costs, FVTPL (Fair

Value though Profit & Loss) and FVTOCI (Fair Value through Other Comprehensive Income); ■ Review trading and hedging of derivatives under the new IFRS 9 rules; ■ Analyse financial liabilities at amortised cost and FVTPL including fair value for own credit; ■ Understand IFRS shareholders’ equity and the reconciliation to CET 1 (Common Equity Tier I),

Tier I and Total Capital.

Session 1 Introduction to Financial Statement Analysis for Banks ■ Balance sheet ■ Income statement ■ Cash flow statement ■ Statement of change in shareholders equi-

ty/comprehensive income

Case Study #1: participants will review Barclays’ financial statements

Session 2

The Banking Book

■ Types of banking books• Mortgages• Credit cards• Personal loans• SME loans• Corporate loans• Syndicated loans

■ On balance sheet or securitised ■ Amortised cost methodology ■ Credit Issues and collateral ■ Non-performing loans

Session 3

Loan Loss Impairment

■ Incurred losses (IAS 39) has been replaced by expected losses (IFRS 9)

■ Three stages process to determine impair-ments• Stage 1: “12-month expected credit loss-

es” with effective interest rate on gross on gross carrying amount

• Stage 2: “life-time expected credit losses” with effective interest rate on gross on gross carrying amount

• Stage 3: “life-time expected credit losses” with effective interest rate on gross on amortised costs

Case Study #2: participants will assess the credit deterioration of a loan

Session 4

Financial Instruments

■ Amortised Costs ■ Fair value through Profit & Loss (FVTPL) ■ Fair value through Other Comprehensive In-

come (FVTOCI) ■ Accounting treatment determined by (i) busi-

ness model (ii) nature of cash flows ■ Decision tree to decide on classification of

financial instruments

Case Study #3: participants will be presented with a few financial instruments


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and will classify them in their relevant categories

■ Balance sheet and P&L calculation of a bond at amortized cost• Based on the Internal Rate of Return (IRR)

of future cash flows• Treatment of fees in the IRR calculation

■ Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI• Effective interest rate method for interests

(same as amortised costs)• Unrealised gain based on NPV at current

yield of future cash flows ■ Fair value assessment

• Level 1 based on unadjusted quoted price• Level 2 based on quoted price in inactive

markets or observable model input• Level 3 based on unobservable but signifi-

cant inputs to the overall value

Case Study #4: participants will compute on Excel the impact on balance sheet and P&L of a bond under amortised costs and FVTPL

Session 5

Derivatives

■ Trading and hedging ■ Hedge accounting: fair value, cash flow and

net investment ■ Netting derivative assets and liabilities ■ Qualification for hedge accounting

• Cash flow hedge• Fair value hedge• Net investment hedge for foreign subsidi-

aries

Case Study #5: participants will classify a few hedging transactions in their relevant categories

Case Study #6: participants will value an interest rate swap accounted for as a cash flow hedge

■ IFRS 9 hedge accounting more closely aligned to risk management policy• Removal of hedge effectiveness criteria

(80% to 125%)• Extends eligibility of risk component to

include non-financial items • Permits aggregate exposure that includes

a derivative to be eligible hedged item• Group of items and a net position (e.g.

assets & liabilities or forecast sales & pur-chases) hedged collectively as group

■ Accounting treatment for time value of money for options: a two-step process through OCI

■ Accounting treatment for foreign currency for-ward points in OCI

Case Study #7: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position

Session 6 Financing: Debt and Equity

■ Financial liabilities at amortised cost or FVTPL• Own credit deterioration reduces institu-

tions’ liabilities• Liability reduction due to rating downgrade

to be now classified in OCI ■ IFRS shareholders’ equity and treasury shares ■ Common Equity Tier 1 (CET1), Tier 1, Tier 2

and Total capital• Key reconciliation items from IFRS Book

Equity to CET1: minority interests, deferred tax, changes to investment portfolio, etc.

■ Overview of calculating risk weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk

Case study #8: Review Barclays’ Shareholders Equity to Tier I reconciliation






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Debt Finance for SMEs

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SME’s are a challenging sector for banks especially in the present climate and usually fall outside the radar of most corporate finance specialists.

These businesses are usually undercapitalised, lack security, have a limited track record and are normally heavily reliant on external providers for working capital. A major criticism of the banking sector globally is that banks have all but closed their lending books to this sector despite protestations to the contrary.

This course considers the risks, challenges and difficulties encountered in dealing with the SME’s and tries to persuade delegates that it is not quite the terrifyingly risky sector that at first glance it seems to be.

Learning Objectives

Explain the importance, structure and composition of this sector to corporate finance professionals by: ■ Defining the basic rules and how to communicate and deal effectively in lending to small and

medium enterprises ■ Listing the different principles for financing small and medium enterprise ■ Assessing SME creditworthiness ■ Applying funding mechanisms for small and medium enterprises ■ Identifying risks associated with lending small and medium enterprises ■ The use of non-financial analysis to consider the future prospects of an SME business ■ The identification of factors which will be critical to success.

Knowledge Pre-requisites

This course assumes at least a basic understanding of banking lending, including financial and non-financial analysis.

Introduction – What is an SME and What are the Challenges? ■ Definition ■ Shortage of capital and liquidity ■ Shortage of skilled manpower ■ Quality control problems ■ Lack of entrepreneurial expertise ■ Shortage / irregular availability of financing

facilities and/or equity sources ■ Inability to meet credit criteria / credit con-

ditions ■ Inadequate bargaining skills / options ■ Lengthy documentation procedure ■ Helping the SME to succeed

Case Study/Exercise

Why Do Banks Lend to SME’s ■ Diversification of the loan portfolio ■ Boosting the industrialization process ■ Reducing unemployment ■ Growth of the export sector ■ Improving the balance of payment situation ■ Low loan loss ratio on SME bank deposits /

banking servicesCase Study/Exercise

How Do They Lend ■ Overdrafts, loans and term loans ■ Asset Finance ■ Leasing ■ Trade finance ■ Guarantees & Indemnities ■ Sole Traders ■ Partnerships


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■ Limited Companies ■ Stakeholder guarantees almost mandatory ■ Risk Appetite in practice

Case Study/Exercise

Preferred Sectors for SME Financing ■ Export oriented goods and services estab-

lishments. ■ Largely using indigenous technology and

resources. ■ Choices of sub-sectors within each industry. ■ Up stream/ down stream ■ Serving to medium / larger ■ Cottage / heritage industry.

Case Study/Exercise

Financial Evaluation of the SME ■ Is there a plan ■ Importance of financial Statements ■ Balance Sheets ■ Profit and Loss Accounts ■ Cash flow Forecasts-Assumptions and Sen-

sitivities ■ Off balance Sheet Assets ■ Risk and Mitigants ■ Project Appraisal – NPV, Payback

Case Study/Exercise

Financing Considerations ■ Assessing the quality of SME financing pro-

posals ■ Quality of ownership of prospective borrow-

ing entities ■ Key financial ratios, market competition,

size, scope & potential of product line ■ Security collateral coverage, importance of

personal guarantees ■ Lending guidelines, prudential regulations

Case Study/Exercise

Ratio Analysis For SME’s ■ Minimum requirements ■ Importance of Financial Analysis ■ Trend Analysis ■ Key Performance Indicators ■ Financial Strength ■ Liquidity ■ Serviceability ■ Working Capital Management & Asset Per-

formanceCase Study/Exercise

Non-Financial Analysis of the SME

Business Plan ■ The need for both Financial and non-finan-

cial analysis ■ Real Business issues for SME’s ■ Value Stream for SME’s ■ Identification of critical success Factors ■ Identification of Key Performance Indica-

tors ■ Credibility of Business Plans ■ Credibility of Management

Case Study/Exercise

SME – Lending Challenges ■ Relatively informal structure and organiza-

tion of SMEs ■ General lack of financial and managerial

expertise ■ Poor record keeping and planning on the

part of their owners ■ Danger / problem signs / signals, ■ Problem solving / trouble shooting ■ Cautions & protections

Case Study/Exercise

The Role of Specialised Institutions ■ Government Agencies ■ International Agencies ■ Provincial And/or Regional development

agencies ■ Subsidies ■ Support programmes including guarantees ■ NGO’s

Case Study/Exercise

Why Bother? ■ The importance of SMES ■ SME numbers ■ The Future ■ Picking today’s winners ■ Economic & Strategic Considerations

Case Study/Exercise



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Emerging Market Bank Modelling & Valuation

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Course Overview

This course covers the key elements of modelling and valuing the activities of an emerging market commercial bank, including the main elements of retail and commercial banking.

After an overview of the key elements of bank analysis, participants will build an integrated financial statement forecast model, projecting asset and liability balances, interest rates and spreads for key assets and liabilities, using industry best practices.

A real-world emerging market case study and financial filings will be used to extract key information. Participants will learn industry-specific forecast methodologies and apply them in a financial model.

The course will allow participants to understanding how the Basel II, 2.5 and III compliance requirements effect bank regulation, including minimum capital requirements, the supervisory review process and disclosure. The course will allow participants to calculate risk-weighted assets, tier one and tier two capital and to model a bank income statement using the balance sheet as a driver.

Once the participants have built a financial model, they will use this to value the case study bank using cash flow based and multiple based valuation techniques.

The participants will consider the type of cash flow model to be used for each case study bank, the various cash flow models that could be used and how issue such as terminal value should be treated.

The interaction with the regulatory capital requirements and how the upcoming Basel III regulations will affect capital requirements will be considered.

Case Study: The participants will use a variety of case studies and exercises during the three days, based on emerging market case study company.


The fundamentals of bank analysis

■ Banking in context and corporate structure ■ Examine the components of the balance

sheet • Liquid items – cash and deposits • Trading items, derivatives and other

short term items • Loans and advances • Equity and reserves • Off balance sheet items

• Accounting and valuation issues – impact of different valuation approaches on the capital base and income statement

Case Study I: Participants analyse the liquidity and maturity of a case study balance sheet

■ Analysing the components of the income statement • Interest income • Fees and commissions


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• Income from affiliates ■ Performance analysis - explain the impor-

tance of key ratios: profitability, operation-al, and risk ratios

■ The CAMELs approach to bank analysis

Case Study II: Participants analyse the income statement of a case study company and calculate various key ratios for the business

Building a financial institution forecast model

■ Overview of bank accounting & regulation ■ Key elements of a bank model

• The balance sheet as a driver • Key elements of the income statement • Determining economic drivers for differ-

ent types of banks Case Study III: Participants are introduced to the bank forecasting model and review its structure, linking up the balance sheet and income statement

Modelling different banking activities

■ Overview of the key activities in a com-mercial bank

■ Modelling the core activities: determining the key drivers • Retail banking • Consumer lending and credit cards • Commercial banking • Investment banking • Asset / wealth management

■ Incorporating core activities into the in-come statement and balance sheet

Case Study IV: Participants build out the case company model incorporating the various core activities into the model

Commercial banks and the regulatory framework

■ Basel II compliance and its effect on bank regulation • Pillar I: minimum capital requirements • Pillar 2: supervisory review process • Pillar 3: market discipline

■ Basel III and the effect on capital ratios ■ Calculating risk-weighted assets ■ Calculating tier one and tier two capital

Case Study V: Participants model risk-weighted assets and tier one and tier capital for a case company

Further issues to consider in a bank model

■ Debt service and income as operating or financing expense

■ Regulatory constraints on reinvestment and implications on growth

■ Projecting cash flows ■ Incorporating regulatory constraints into

the model ■ Dealing with regulatory capital ratios ■ Calculating minimum capital adequacy

Case Study VI: Participants complete the case company model incorporating a cash flow forecast and various regulatory ratios

Auditing the model and sensitivity/scenario analysis

■ Balancing the model and checking for ac-curacy

■ Error-proofing techniques & sensitivity analysis

■ Ratio analysis – the key efficiency, operati and financial ratios for a bank

■ Building scenarios – the key drivers ■ Sensitivity analysis - flexing financials and

capital structure including the implications of Basel III on capital requirements

Case Study VII: Participants build error proofing techniques and scenario/sensitivity analysis into the case company model and produce efficiency, operating and financial ratios for the case company

Case Study VII: Participants build error proofing techniques and scenario/sensitivity analysis into the case company model and produce efficiency, operating and financial ratios for the case company






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Valuing a bank

■ Valuation issues – getting to intrinsic value in a bank valuation• Issues with a bank business model• Key accounting issues in the bank sector• The valuation issues surrounding regula-

tory capital ■ Valuation issues – relative valuation tools

used in a bank valuation• The key multiples used• Deriving multiples from fundamentals

■ Valuation approaches for a bank – building a dividend discount model• Determining the number of stages to be

used• Calculating the discount rate• Maturity phase and terminal value as-

sumptions

Case study VIII: Participants build a dividend discount valuation for the case company

■ Valuation approaches for a bank – building a residual income model• Determining the number of stages to be


sumptions

Case study IX: Participants build a residual income valuation for the case company

■ Valuation approaches for a bank – building a cash flow to equity model• Determining the number of stages to be


sumptions• Implication of changing capital require-

ments including Basel II I capital ratios

Case study X: Participants build a cash flow to equity valuation for the case company





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Financial Statement and AnalysisA 3 Day Course

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This course:

■ Provides an introduction to the basic principles and practice of financial accounting and report-ing

■ Combines theoretical rigour with a strong element of everyday commercial reality and a wealth of practical detail

■ Is slanted towards the needs of users rather than preparers

It therefore present not only a beginner’s course in bookkeeping for historic transactions, but also a primer on the objectives, conventions, methods and limitations of financial reporting, as a future-orientated aid to decision making by external stakeholders, such as equity shareholders, investment analysts, lenders, and credit risk managers;

■ Assumes no prior technical knowledge of accounting or bookkeeping

However, participants are expected to have a general appreciation of the concept of profit and loss, and of a business or other organisation as a legal entity (referred to as “the entity” in what follows) distinct and separate from its owners or controllers

■ Is presented at a basic level where the nuances of the differences between IFRS, US GAAP and other national accounting frameworks rarely matter

But in the interest of consistency and transparency, it is presented throughout in accordance with the principles and terminology of IFRS. This can of course be adjusted in the light of the specific situation and preference of the client.

Regulatory environment

■ Companies Act 2006 categories of compa-ny and the basic framework; SME, other private and listed

■ What is defined as ‘listed’ for different re-porting purposes; Companies Act, APB, ASB

■ Summary of listing requirements for annual and interim reports for Full, AIM and Plus listed companies

■ IFRS/ UKGAAP options and the implications of joining and moving between markets

■ Accounting changes – update on option to move to IFRS and planned concessions for qualifying subsidiaries

■ Options within IFRS and UKGAAP Standards – overview

■ Latest changes to accounting for business combinations – the new test for control

Narrative reports

■ Accounting policies and uncertainties – the basic requirements

■ Directors report contents and the review of the business

■ Operating and financial reviews ■ Other additional statements and summaries

– regulatory framework and reporting obli-gations

■ Review of latest proposals for strategic re-port

Directors and management information

■ Directors’ interests, changes in directors, loans and other transactions with directors and other key reportable events

■ The directors’ remuneration report; legal, listing and accounting disclosure obligations – including for share option arrangements

■ Proposal for high level summary remunera-tion report

■ Corporate governance statements and the obligations of management and advisors

Additional listed company statements

■ Segmental reporting obligations


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Financial Statement and AnlysisA 3 Day Course


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• Single segment businesses; and• Information that is commercially damag-

ing ■ Interim reports

• Required format and contents• Variations from year end policies permit-

ted

Other reporting concessions and options

■ Related party transactions and the exemp-tion for wholly owned subsidiaries

■ Consolidated and individual company state-ments of cash flow

■ Group and holding company profit and loss statements

■ Statutory concessions and exemptions from consolidation for example

■ Planned concession from audit for qualify-ing subsidiaries

Concluding points

■ Future developments and plans – the future for UKGAAP (overview)

■ Key contentious issues for advisors

Objective of financial accounting and reportingTo record, in an orderly and systematic way, historic transactions and other events that may

■ provide information that is relevant to the amount, timing and uncertainty of the enti-ty’s future cash flows;

■ have effects on the entity that are reliably measurable in financial terms and

■ be useful to external stakeholders in mak-ing decisions about the future, and spe-cifically in decisions to provide financial resources to the entity.

Basic conventions of financial accounting and reporting

■ The entity principle: the entity has definite boundaries and is separate from its owners, managements, controllers and sponsors

■ The accruals principle: transactions are recorded when the entity becomes a party to them, and not when any associated cash flows might occur

■ The going concern principle: it is assumed that the entity will not have to liquidate or curtail its operations in the near future

■ The reliable measurement principle: trans-actions and events are usually recorded only when and to the extent that their im-pact can be reliably measured in financial terms. This is a severely limits the ability of financial accounts to present what is commonly called ‘the whole picture’ of an entity

Distinction from management accounting

■ Financial accounting is primarily designed to inform outsiders about the implications of historic transactions and events on the financial condition (balance sheet), finan-cial performance (income statement) and cash position (cash flow statement) of the entity;

■ Management accounting is primarily de-signed to assist management in running the entity more profitably and efficiently, and is therefore not confined to financial measures but contains much non-financial information, e.g. about the volumes and make-up of goods and services, the time taken by processes etc.

The method of financial accounting (so-called ‘double-entry bookkeeping’) :

■ Financial accounting is a process that trac-es• the inflow and outflow of resources (as-

sets) into and out of the entity;• increases and decreases in the entity’s

obligations (liabilities) to third parties; and

• the impact of a) and b) on the entity’s owners’ residual economic interest in it (equity)

■ Every transaction or other relevant event impacts the entity’s resources and/or the entity’s obligations and/or the entity’s owners’ residual interest in it, in two sepa-rate ways

Exhaustive practical exercises in the basic recording of a wide range of transactions and events:

■ Sales: for cash, on credit, and prepaid ■ Purchases and other direct costs incurred:

for cash, on credit, and prepaid ■ Resources and obligations that impact

more than one accounting period (capex and depreciation, prepayments, accruals






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Financial Statement And AnalysisA 3 Day Course


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and deferred income) ■ Real estate transactions: purchases, sales,

sales and leasebacks, rent and other incen-tives

■ Obligations that are uncertain in timing or amount (provisions)

■ Changes in the economic value of resources (writedowns of inventory and receivables, revaluation of real estate and other assets)

■ Intangible assets and the special restric-tions on their recognition

■ Sales taxes and taxes on the entity’s own profit

■ Reconciling external confirmations to inter-nal records, e.g. bank statements

Preparing the period-end financial statements:

■ The income statement• Sales and direct expenses, leading to

gross profit• Other operating income and expense,

leading to operating profit• Finance income/expense, leading to pre-

tax profit• Taxation charge for the period, leading to

net income ■ The balance sheet (components, definitions

and layout)• Assets

■ Current ■ Noncurrent

• Liabilities ■ Current ■ Noncurrent

• Net assets• Shareholders’ equity

■ Share capital and premium ■ Retained earnings ■ The cash flow statement

• Method of preparation ■ Direct ■ Indirect

• Structure ■ Cash flow from operating activities ■ Cash flow from investing activities ■ Cash flow from financing activities

An introduction to elementary financial analysis

■ The uses and limitations of financial ratios: developing simple metrics to track• Operating profitability (e.g. gross and

operating profit, return on sales)• Operating efficiency (asset turnover/

utilisation)• Overall profitability (e.g. return on capi-

tal employed, return on equity)• Liquid assets and liabilities: volume and

velocity of conversion/circulation)• Cash flow coverage of fixed charges• Solvency: leverage and gearing





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IPO Training

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Listing a company on a stock exchange via an Initial Public Offer (or “flotation”) is a complex, time consuming and strategically important corporate activity.

While not being the only option available to achieve an exit from their investment by shareholders, it remains a popular and desirable objective for many.

However, the choice to gain admission for the trading of a company’s shares on a stock exchange involves extensive work on accounting, legal, and governance issues. Anticipation of the ongoing obligations of companies, post IPO, is also an important element of preparation.

The course covers the practical aspects of preparation needed for a successful IPO, both in terms of the documentary requirements and the roles and responsibilities of the various advisers involved in the process.

The possible changes to its board of directors and to its accounts by the applicant company are also discussed, together with the need to fulfil “ongoing obligations” post IPO.

Rationale for “Going Public”

■ Reasons in favour • Additional capital to expand• Part exit• Higher status

■ Reasons against• Loss of control• Expense

■ Alternatives to going public • Trade sale • Private equity

■ Available markets• London Stock Exchange

■ Standard listing ■ Premium listing

• Alternative Investment Market ■ Differences in regulation ■ Tax status

• ISDX (formerly Plus Markets) ■ “kindergarten” for small companies ■ Future prospects?

Review: IPO timetable. Describing the various elements, and their inter-relationship, that are required for the production of a prospectus together with the responsibilities of the different parties involved.

Market Requirements and the Investment Proposition

■ Generic Exchange requirements • Stability of business• Profit record• Working capital adequacy

■ Market and investor requirements • Lifecycle status of company and its prod-

ucts• Growth stock or utility?• USP and comparators

■ Valuation • EV / EBITDA• P / E• DCF

Finance and Accounting

■ The importance of adequate financial report-ing procedures

■ The long form report ■ Working capital adequacy and profit fore-

casts ■ Accounting policies : IFRS vs GAAP ■ Tax structuring ■ Employee remuneration / incentives

Review: The Long Form Report. Examining the issues and topics that are covered in a Long Form Report, leading to the production of the working capital adequacy


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statement and profit forecast.

Legal issues

■ General • Contract breaches • Current and impending litigation • Regulatory compliance

■ IPO-specific • Prospectus responsibility• Directors and officers, remuneration • Related party transactions • Risk factors • Verification

Review: Recent prospectuses, reviewing the different elements of content and presentation used by different companies.

Governance

■ Director background checks ■ Appointment of non-executive directors ■ Internal audit and risk management ■ Legislation on corruption, sanctions, mon-

ey-laundering

Review: CalPers Core Corporate Governance Principles. Discussion of the key principles driving market and regulatory practice in respect of corporate governance.

Pricing and underwriting

■ Fixed price ■ Tender price ■ Bookbuilding ■ “Green Shoe” and price support ■ Offer for sale, placings, introductions ■ Fees

Exercise: Bookbuilding versus tender offer, deciding how and at what price shares will be allotted.

■ Methods of Flotation • • Offer for sale • Offer for subscription• Placings• Introductions • Reverse takeovers• Carve outs and demergers

■ On-going obligations • PDMRs and close periods• Significant transactions • Disclosure of price-sensitive informa-

tion

Disclosure of dealings and shareholdings



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New Market Abuse Regulation for EU

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On 3 July 2016, the new Market Abuse Regulation (MAR) (Regulation (EU) No 596/2014) starts applying in all EU Member States, replacing the Market Abuse Directive.

The regulation has effect directly on each Member State without having to be transposed into national law and is applicable for the first time to all companies trading on Multilateral Trading Facilities, as well as those on Regulated Markets.

This course examines requirements of the new MAR, its technical standards and its guidelines and the changes these will bring.

The new MAR regime

Replacement of Market Abuse Directive

■ EU Regulations, Standards and Guidelines ■ Role of European Securities and Markets

Authority (ESMA) ■ Extended application covering MTFs

Prohibition of market abuse and market manipulation

■ Definition of inside information ■ Insider dealing ■ Unlawful disclosure of inside information ■ Broadening of market manipulation

Disclosure of inside information

■ Technical Standard on means of disclosing ■ Conditions for delaying disclosure ■ ESMA guidelines on legitimate interests ■ Notification of delays in disclosure

Safe harbours from market abuse

■ Market soundings standards and ESMA guidelines

■ Legitimate behaviour ■ Share buy-back changes ■ Stabilisation

Insider lists

■ Responsibility ■ Technical Standard format with additional

information ■ Requirements for MTFs

Managers’ transactions

■ Changes in director/PDMR notifications ■ Annual thresholds ■ Technical Standard for disclosure format ■ Closed periods ■ Exceptions from closed period dealing


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Private Company Sales in the U.S and UK

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Oscar Wilde is reputed to have said “England and America are two countries separated by the same language”. The same could be said of the differences in the M&A process. This course contrasts the market-based customs and practices of US and UK custom with respect to the M&A process and some of the key legal differences in relation to the sale and purchase of shares of private companies together with some references to related agreements. Whilst the practices and customs that apply to U.S. deals are largely the same across the Continental U.S. (and Canada to some extent), the U.S. is a federal system and there are differences in law and practice between the various states. In this context, references to U.S. law largely refer to New York law, and (where relevant) to Delaware law with some references to Californian law.

Globalization and the influence of the European Union means that, despite civil law dominating Eu-rope, many of the practices and customs in relation to M&A are broadly similar in the UK and Europe law, so reference is made to civil law systems where these differ from English law (e.g. re duty to negotiate in good faith).

The programme does not attempt to offer a linear approach and contrast all the key differences in all customs and practices (e.g. Locked Box remains much rarer in the U.S. than Europe), but simply those where law and practice differs significantly.

This course was originally developed for a U.S. investment bank looking to provide their staff with a sound basis on the legal aspects as well as the commercial customs in M&A deals in the U.S. and Europe. In this context it will appeal to lawyers, corporate finance advisors, bankers, accountants and corporates looking in M&A or related activities.

General matters ■ U.S. is a Federal system – so different states

have different approaches• The Big Three - NY law, Delaware, Califor-

nia ■ Terminology - key differences ■ Formalities – key differences ■ General principles of interpretation

• U.S. law• English law• European law

■ What types of Efforts/ Endeavours• English law (review of relevant case law)• NY law (review of relevant case law)• California• Impact on the deal

■ Negligence • English law - Gross negligence and willful

misconduct• NY law – ordinary & gross negligence and

willful misconduct• Duty to negotiate in good faith (review of

relevant cases) ӹEnglish law ӹNY law ӹEuropean approach

■ Damages & Liquidated damages & Penalty clauses• English law approach • Historical position• Cavendish Square case • Lessons and implications from Cavendish

Square• NY law approach

■ Approach to CPs – English law vs NY• Passage of risk - – English law vs NY

Exclusivity Agreements vs No shop No talk ■ UK approach – Exclusivity agreements gen-

erally ■ U.S. approach

• No Shop• No Talk• Gemini vs Ameripark – Lessons from the

case Heads of Agreement ■ English law

• Key requirements• The “essential” terms• The “subject to contract” trap

■ NY law• Type 1 – the 4 key factors per Vacold v

Cerami • Type 2 – the 5 key factors

■ California law• Key requirements

■ Delaware law• Summary of current position• Lessons from the SIGA case • How to avoid the pitfalls

Representations ■ General difference between English law vs

U.S. (NY) approach re “representations and


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Private Company Sales in the U.S and UK

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warranties”• Representations in English law• Representations in U.S. (is it that differ-

ent?) ■ Non-contractual representations and waiver

of liability for fraud - three key clauses• Entire Agreement• Non-reliance• Exclusive remedies

■ Approach under English law & key cases (e.g. Witter, Grimstead)

■ Position in NY (Danann and Grumman cas-es)

■ Position in Delaware (ABRY case)Warranties & Indemnities – U.S. vs English law ■ Scope of Representations & Warranties gen-

erally - U.S. vs UK ■ Quantification of damages for breach of

warranty/representation ■ Buyer’s Knowledge & materiality ■ Materiality “scrapes” (U.S.)

• Defined• Application• Ramifications• Seller v Buyer arguments

■ Potential liability – FSA vs Rule 10b-5 (Se-curities Exchange Act)• Key aspects for Rule 10b-5

■ Indemnities• Approach in England• Approach in U.S.

Limitations on liability ■ UK approach

Value as is and value as warrantedWarranty insurance

■ U.S. approachGreat use of Escrow: key negotiation issues for the

parties ■ Four potential problem areas (U.S.) – FBAR

Regs., Definitions, HYC, Domicile ■ Procedures for release of funds ■ How many escrow accounts ■ Dispute Resolution – UK vs U.S.

Disclosure - Practice in U.S vs UK ■ General differences in approach to due dili-

gence ■ General vs Specific disclosures ■ Disclosure bundle and disclosure of the data

room ■ Scope of specific disclosures - effectively

disclosed against ALL warranties, cross-ref-erencing

■ Disclosure qualifies all vs specific warranties ■ Buyer’s knowledge

• Standard in England vs U.S approach ■ Sandbagging and Anti-sandbagging

• Three approaches• U.S. case law• UK approach and case law

Split Signing / Completion MAC/MAE clauses ■ Completion conditions generally – U.S. vs

UK ■ Financing conditions generally

• UK• U.S. SunGard issues - “Typical” require-

ments• Other aspects – reverse transaction fees,

specific performance ■ Repetition of warranties/representations at

Financial close / Completion ■ Different approaches in the U.S. - warran-

ties true “in all material respects” or MAC standard

■ Approach in UK ■ MAC/MAE clauses

• Position in UK• Position in U.S. generally

ӹDifferent approaches - part of “Termina-tion” clause vs Stand-alone clause ӹReview of U.S. MAC clauses ӹPosition in Delaware (review of cases) ӹPosition in NY (review of Inkeepers Trust case)

Other matters ■ Stockholder Representative Agreements ■ Hart-Scott-Rodino


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Repo and Securities LendingIn-House

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This Repo and Securities Lending course provides full coverage of the important aspects of repo trading and the pertinent issues involved in Securities Lending. It is relevant for in-house lawyers and private practice lawyers alike as well as bankers and repo traders involved in anything from the day to day business as usual plain vanilla repos to the more complex heavily negotiated repo trades involving structured securities or unusual assets. This course will also be relevant to the Operations and Documentation teams involved in repo transactions from time to time, structurers, compliance personnel as well as accountants who advise clients on repo trades.

The first part of this course sets the scene by giving an introduction to repos; the development of the repo market in Europe, the legal and economic characteristics of repos, the definitions and terminology ‘jargon’ that is commonly used in the repo market and the uses and benefits of repos. We then go through the various types of repo products in the market and discuss the risks, mitigants and distinguishing characteristics of repos.

The second part of the course covers the architecture of the GMRA documentation framework. Here we will go through the key provisions of the GMRA and discuss topical issues relating to and affecting the repo market. We will go on to discuss the 3 levels of activity in the repo market followed by a detailed step by step analysis of how a repo trade is negotiated and executed. We then cover the pertinent issues in the regulation of the repo market in Europe.

The third part of the course will cover an overview of Securities Lending; what it is, the reasons for it, the parties involved in it and the advantages and disadvantages for using it. We will discuss the legal structure and the various risks involved in Securities Lending. We will then go on to analyse the GMSLA documentation and the key provisions. We will undertake an analysis of the relevant case law in this area following which we will discuss the regulations effecting Securities Lending and the upcoming regulatory changes and considerations to be aware of. We will specifically discuss the much talked about Securities Financing Transactions Regulation (SFTR), its requirements and the timeline.

Please note that the sections on regulations are subject to change depending on the time of the year this training course is delivered as per the regulations and guidance that are published from time to time.

Complimentary materials including content filled presentation slides, the GMRA and relevant articles will be provided to all participants.


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INTRODUCTION: REPO OVERVIEW

The Legal and Economic Characteristics of Repos

■ Definition of a Repo ■ “True Sale” title transfer ■ Rehypothecation ■ Enforcement ■ Substitution ■ Similarities to Secured Loans ■ Cashflows ■ Definitions and Terminology (Jargon):

• Haircuts• Income• Manufactured Payments• Repo Rates• Pricing Rates

■ Fungibility issues ■ Uses of Repos:

• 4 basic functions: ■ Secured Financing ■ Covering Long or Short positions ■ Monetary Policy Instruments ■ Creating Leverage ■ Types of Securities used in Repos:

• Government bonds• High grade bonds• Credit Repos

■ Participants in the Repo Market• Buyer’s side• Seller’s side

■ Types of Repos and similar transactions ■ Distinguishing Characteristics of Repos ■ Risks in a Repo

• Counterparty credit risks• Collateral risks• Transferability• Collateral Management• Legal Certainty

■ Mitigation of Counterparty Credit Risks• Margin Ratio• Margin Collateral• Set off

REPO DOCUMENTATION

Introduction

■ Architecture of the GMRA documentation• Versions• Annexes• Confirmation• Market Protocols and Guidelines

■ 2011 GMRA Protocol ■ ICMA ERC Guide July 2015 ■ Securities Borrowing and Lending Code of

Guidance ■ ESMA Guidelines on repo and reverse repo

agreements for UCIT Funds ■ Reasons for the GMRA

• Recharacterisation risks• Margining• Event of Default Procedures• Netting Rights• Basel III Capital Requirements• Operational Benefits• Harmonisation• Use in Structured Transactions• Legal Opinions

The GMRA

■ Key Obligations under the GMRA• Initial Exchange• Income Payments• Payment/delivery of Margin• Final Exchange

■ Key Provisions and Considerations:• Collateral Selection• Events of Default

■ Consequences of Failure to Deliver:• at start of a repo • at end of a repo

■ Standard Events of Default ■ Default Notices ■ Close-out: 3 stages ■ Valuation Procedures ■ Consequential Losses ■ Negative Repo Rates

• Definition• Circumstances when this occurs• Problems caused

■ Repo Rate Indices• STOXX GC Pooling Indices• The GCF Repo Index• Gov PX• The RepoFunds Rate• The Repo Overnight Index Average (RONIA)

■ Accounting Treatment of Repos • Balance sheet treatment not aligned with

legal form• Lehman Brothers’ Repo 105 and MF Global

under US GAAP• IFRS

■ Short-selling• What is it?• Essential functions• Risks of short-selling• Uncovered short-selling and market abuse• EU Short Selling Regulations

■ Shadow Banking ■ The Central Clearing Counterparties (CCPs)

• The functions of the CCPs• Benefits of using CCPs• The Principal CCPs in Europe• Repo trading systems






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■ Pro-cyclicality ■ CSD Regulation (CSDR)

• Application• Exemptions• Benefits

Levels of Activity in the European Repo Market

■ Trading – How repos are trades are negotiat-ed and executed • Direct trading• Automated Trades• ATSs• The ATSs operating in Europe

■ Clearing – Netting by repo parties• Uncleared trades• Bilaterally cleared trades• Multilaterally cleared trades

■ Collateral Management – Delivery and Main-tenance• Bilateral• Tri-party

Step by Step Process of How a Repo Trade is Done

■ Establish identity of counterparty – Legal Entity Identifier (LEI)

■ Establish whether parties dealing as principal or agent

■ Key economic terms and post-trade checks ■ How to quote repo rate ■ How to work out Purchase Price – dirty price

inclusive of haircut ■ Fixing Purchase and Repurchase Dates

• For non-forward repos• For forward repos

■ Allocating collateral and agreeing pricing ■ Negotiating rights of substitution ■ Interest rates and charges on late payments ■ Post-trade verification process ■ Confirmation ■ Affirmation ■ Recommended Delivery Size ■ Partial Delivery – Exercising Mini-Close Outs ■ Dealing with Negative Repo Rate issues ■ Interest on Cash Margin ■ Calculating Floating-Rate Repo Interest

• Method 1 – Ultimate Day Crystallisation• Method 2 – Penultimate Day Crystallisation

■ Calculating Open Repo Interest ■ Margining:

• Fixing Haircut• Calculating Margin Calls• Calculating Transaction Exposure• The Price used to Value Collateral

• Margin Thresholds• Deadlines for Margin Calls and Delivery• Applying Haircuts to Margin Securities• Interest Payments on Cash Margin

REGULATION OF THE REPO MARKET IN EUROPE

■ EU Financial Collateral Directive ■ Short Selling Regulations ■ EMIR ■ CSDR (Central Securities Depositories Regula-

tion) ■ MiFID II ■ TARGET-2 Securities (T2S)

SECURITIES LENDING OVERVIEW

■ What is Securities Lending? ■ Reasons for Securities Lending ■ The Parties Involved ■ Legal Structure

• Initial Exchange• Mark to market/top-up• Title Transfers• Voting Rights

■ Risks• Legal Risks

■ Capacity ■ Netting/Set-off Opinions ■ Recharacterisation ■ Governing Law and Insolvency Laws

• Regulatory Risks• Credit Risks• Market Risks

SECURITIES LENDING DOCUMENTATION

■ The ISLA ■ The Global Master Securities Lending Agree-

ment (GMSLA) – versions ■ Industry Guidances:

• SLRC – Securities Borrowing & Lending Code of Guidance

• ISLA EU Agency Lending Best Practice Paper• UK Agency Lending Code of Guidance• Checklists for Lenders

■ Architecture of the GMSLA documentation ■ Benefits of using a GMSLA ■ Key Provisions

• Initial Exchange• Manufactured Payments• Marking to market of Collateral• Events of default• Representations and warranties






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REGULATION OF THE SECURITIES LENDING MARKET IN EUROPE

■ The Stock Exchange Rules ■ RAO under FSMA ■ The Disclosure and Transparency Rules ■ Financial Collateral Arrangements ■ Shadow Banking concerns

THE SECURITIES FINANCING TRANSACTIONS REGULATION (SFTR)

■ Scope of the SFTR ■ Exemptions from the SFTR ■ Definition of SFTs ■ Key Requirements of the SFTR

• The Reporting Obligation• Trade Repository Registration and Super-

vision• Investor Transparency• Periodical Information To Be Provided• Rehypothecation

■ Administrative Sanctions and Measures






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Restructuring, Turnarounds & Schemes of ArrangementIn house

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Course Overview

Restructuring covers a broad range of situations which many firms in Europe will experience at some stage. There are often occasions when the group’s financial performance goes unrewarded by the markets and the sum-of-the parts is greater than the whole (the classic Racal /Vodafone demerger) and this leads to the need to consider a restructuring in order to enhance shareholder value. On other occasions, a restructuring is necessitated by strategic issues (BA/ Go). Thirdly, restructurings take place because a group is in financial difficulties and the implementation of the transaction is intended to achieve a “turnaround” in the group’s fortunes.

Restructuring (or reorganisation – the terms are often used interchangeably) can be effected in a wide variety of ways: both formally, in court, or less formally, out-of-court. Additionally there are a wide range of methods in which this can be effected but in Europe, unlike the USA, much of the restructuring is done informally.

One of the tools which is assuming increasing importance not only in the UK but also in Europe and further afield is the scheme of arrangement procedure under the UK Companies Act. Despite this, schemes are been used increasingly by non-UK firms to restructure firms in Germany (Rodenstock, Telecolumbus, PrimaCom), Spain (Cortefiel, Metrovacesa, Re La Seda de Barcelona), Italy (Seat), Holland / Bulgaria (Vivacom) and even the Gulf (GIC) and the recent landmark Vietnam (Vinashin) case.

Although some jurisdictions have sought to implement similar legislation (e.g. Spain), the lack of precedents coupled with the enormous flexibility offered by schemes, makes it likely that, for the medium term, UK schemes will retain their attractions to foreign firms.

This programme reviews the key issues of schemes and their use and application together with the problem areas (for example, class and value).

Last, the programme, covers restructuring in a turnaround situation, as that often involves issues not relevant in happier circumstances. In particular it provides a template of the four key issues to consider.

Restructuring

■ Restructuring vs reorganisations ■ Ten tips for restructuring professionals ■ Reasons for restructuring &/or reorganiza-

tions• Financial / operational difficulties• M&A• Unlock or enhance value • Other reasons – strategic, regulatory, tax,

efficiency ■ Internal reorganisations – specific issues

• The valuation conundrum (review of rele-vant cases law)

Demergers

■ Demergers generally - six good reasons for demerging • Review of selected examples (Cookson,

Punch Taverns, Anglo American, BT, BAT)•

■ Types of demergers & demerger procedures• Direct dividend• Indirect or three-cornered demerger• Indirect or three-cornered reduction of

capital• Scheme of arrangement

■ Liquidation scheme under §110 of the Insol-vency Act (UK only)


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Restructuring, Turnarounds & Schemes of ArrangementContinued

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• Overview – use and application• Typical structure• Pros & cons

■ Factors affecting choice of demerger meth-od & structure

Restructuring the equity

■ What are the options? ■ Spin-offs vs split –off vs carve-outs ■ Review of the epic Vodafone / Racal de-

merger – how 2 + 2 = 6! ■ Specific situations

• IPO• Sale of subsidiary

■ Using schemes for public take-overs• Take-overs & squeeze-out• Dealing with foreign shareholders

■ Key considerations• How much should be sold & how much

kept• How much new vs old money• What about the debt (BT / O2)

Schemes of arrangement generally

■ What is a scheme of arrangement? ■ Use and application of schemes

• Restructuring & cram-downs• Reorganisations• M&A• Demergers• Squeeze-outs / dealing with minorities• Return of capital• Aspects affecting loans – amend & ex-

tend (Barcelona de Seda, Cortefiel) ■ Requirements for schemes & problem areas

• Who can implement a scheme?• What’s in a class?• The voting thresholds• Fair treatment and the lessons from the

Assenagon case• Lessons from IMO Carwash (Bluebrook)

case re valuation

Schemes of arrangement – International application (foreign companies)

■ The international dimension – recognition of Schemes for foreign companies

■ Use of schemes for non UK companies ■ Recent examples

• German Schemes - Rodenstock, Teleco-lumbus, PrimaCom

• Vivacom / Bulgarian Telecom Scheme (Holland / Bulgaria)

• Other cases - Seat (Italy), GIC (Kuwait)• Vinashin and why it may be a game

changer

Turnarounds

■ The 3 phases of decline and fall ■ Smoke signals of declining performance ■ Warning signs of financial distress ■ Red alert – signs of a financial crisis ■ There are only 3 options in financial distress!

Fix, Sell, Shut ■ A template for managing a crisis: the 4 key

issues ■ Key issues for main players (especially when

the firm enters the “zone of insolvency’)• Existing management – should they stay

or go?• New management – are they required and

what to look for?• What about secured lenders – any more

support?• What about the other creditors?

■ Who else has leverage & how to handle them?

■ What about a chief restructuring officer – help or hindrance?

■ What’s the cash burn-rate?





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The Corporate Finance Training CourseIn house

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Course Overview

This course is suitable for front, middle and back office functions. It aims to explain the main activities involved in corporate finance, the key decisions that corporates have to make and the factors that influence them.

It will assist those that are involved with identifying business development opportunities for clients, cross-selling of related products and risk assessment.

The course is suitable for those with limited or no previous knowledge of corporate finance. It requires familiarity with company financial statements.

The course is very interactive, using real-life examples and case studies designed to illustrate the range of choices available to corporates. Case studies are a mix of generic structures and analysis, with reviews of recent transactions to illustrate the impact of current market conditions. The focus is on UK and European transactions, using examples of UK regulations to illustrate common structures and rules.

Day One

Overview of Corporate Finance

■ Framework for evaluation of corporate fi-nance strategies

■ How do companies maximise shareholder value, what is the role of other stakeholders?

■ Generic strategy models: Company life cycle, BCG matrix, Porter’s Five Forces, SWOT

Case study: Applying strategic analysis

Introduction to Company Valuation

■ Choice of valuation techniques - asset valua-tion, dividend valuation, SOTP valuations

Case study: When would you consider using dividend valuation?

Multiples Valuation

■ Comparative analysis and selection of com-parable companies

■ Traditional ratios (P/E), newer ratios (PEG, relative PEs) and industry specific ratios

■ Enterprise value and use of EV/EBITDA and EV/EBIT

Case study: Participants value an acquisition using historic and prospective multiples

Case study: Selection of appropriate valuation ratios for different sectors

■ Use of comparable transactions

Case study: Assessing argument for premium or discount vs. comparable companies

Cost of Capital

■ The components of Weighted Average Cost of Capital

■ Cost of debt – government bond yield and spreads

■ Cost of equity -application of the Capital Asset Pricing Model

■ Judgement required for equity risk premium and betas

Case study: Participants review beta data to finalise a cost of capital

Discounted Cash Flow Valuation

■ Enterprise DCF and the use of free cash flows ■ Terminal value and alternative methods avail-

able

Case study: Choice of projection period and terminal value methods

■ Sensitivity analysis and scenarios


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Case study: Participants adjust key variables in a DCF valuation to assess fair value

■ Similarities between DCF and the discount-ed economic profit approach

■ When Equity DCF should be used as an alternative

Day Two

Strategic Decisions

■ The company life cycle ■ Whether to grow organically or by acquisi-

tion

Case study: Evaluating growth options for a business

Acquisitions

■ Types of transactions ■ Availability of synergies and problems in

achieving them

Case Study: Valuing synergies and how they could/should be factored into bid price

■ Due diligence: tie-in with warranties and indemnities, confidentiality issues

■ Key differences between public vs. private deals

■ Defence strategies for target companies resisting a hostile bid

Case study: Defence strategies

■ Acquisition success vs. failure

Divestment ■ Options for sellers ■ Finding potential buyers and building up the

bids

Case study: Choice of sale method to maximise value

Funding Strategy

■ Choice of optimal capital structure appropri-ate for the company’s stage of life cycle

■ The effect of capital structure on WACC - adjusting betas for changes in leverage

■ Debt capacity and link to cash flow forecast-ing used for DCF valuation

■ Relationship between business risk and financial risk

■ Access to debt and equity

■ Credit pricing, significance of credit rating, when bonds offer an alternative to loans

■ Maturities, repayment options and the im-pact of refinancing risk

■ Motivation for and impact of share buybacks

Case study: Review of corporate funding structures

Acquisition Financing

■ Consideration - how is payment made - cash vs. shares

Case study: Selecting between competing bids for a quoted company

■ Financing choices for raising cash ■ The role of asset sales and other means of

releasing cash

Case Study: How much debt is appropriate to finance an acquisition

■ Impact on EPS and the variables that can influence the financing strategy

Day Three

Initial Public Offerings

■ Rationale for going public and alternatives

Case study: Pros and cons of flotation

■ Stock exchange and market requirements ■ When to use public offering rather than pri-

vate placement ■ Use of ADRs and GDRs

Case study: Offer structures

■ Fixed price vs. Bookbuilding vs. Tender price

Exercise: Contrasting results from bookbuilding against tender offer

■ Marketing, roadshows, underwriting, role of research

■ The process of an IPO and the role of advi-sors

Case study: Identify criteria for selection of lead manager(s)

■ Secondary issues – rights issues, block trades – role of the banks and risks




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Leveraged Buy Outs

■ Background to growth of the European pri-vate equity market

■ The threats and opportunities that private equity represents for corporates

■ LBO transaction types and risks ■ The different types of equity - institutional

and management equity

Exercise: Calculating the IRR for a buyout

■ Debt alternatives – senior debt, mezzanine finance, second lien, high yield bonds

Case study: Impact of changing the mix of debt/equity for an LBO

■ Evaluating a buy-out candidate - the golden rules

■ Exit routes and how they’ve been changing ■ Why buyouts succeed or fail

Case study: Review of buyout candidates to select potential winners




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The Debt Finance Training CourseIn House

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Background of the trainer

With over 30 years’ experience in both the training field and in finance, the trainer is regarded as a leading edge trainer in numerous areas. He specializes in Derivatives, Capital Markets, Risk Management, Structured Finance and Treasury Products. He has delivered programs in every major financial center to both buy-side and sell-side firms at all levels.

For more than three decades, the trainer has held various positions in several commercial and international investment banks. Key roles have included positions as Head of Institutional & Corporate Sales as well as being the Head of the Private Client Investment Desk.

He is The Chief Examiner for The Chartered Institute for Securities and Investments Bond and Fixed Income Examination.

This programme has been designed to provide a thorough review of debt financing principles, markets and products. We will use real life case study examples to illustrate the financing techniques and products throughout the programme.

Participants will require laptops with MS Excel for the exercises and case studies.

The broad objectives of the programme are: ■ To provide a complete review of debt financing theory and debt products ■ To identify funding requirements both short and long term ■ To explain asset based financing ■ To explain the real world use of debt financing techniques using current examples ■ To explain yield curves, debt pricing in the primary and secondary markets ■ To explain measures for risk management in debt instruments including interest rate and credit

spread sensitivity (duration and convexity) ■ To demonstrate how interest rate and foreign exchange risk can be managed using derivatives ■ To explain the world of securitisation post 2009

Course Content

Day One:The objective of Day-1 is to ensure that participants understand why and how companies borrow money, the effect that borrowing money has on the financial statement of the company and the role that the bank plays in the process. It also covers sources of finance, products used and investors together with their objectives and expectations.

This module introduces participants to customer funding needs, why they arise and their nature. ■ Principles of debt finance

• Linking finance and corporate strategy• Cost of capital and risk• Theory of optimal capital structure

■ Start-up capital• How to calculate the amount

• Where to get it ■ Working capital

• Banks• Peer to peer lenders

■ Debt versus equity• Advantages and disadvantages• Relative costs

■ Cash flow forecasting ■ Long and short term financing

Case study: Writing the first year’s business plan and cash flow statement.

Module 2 explores the instruments that are available to raise finance and will provide recent examples of products. The following products will be explained: ■ Fixed and Floating Rate Bonds

• How to choose between fixed and floating


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rate• The bond and swap concept• Raising finance in a third currency and

swapping into a desired currency ■ Convertible Bonds

• Types of convertible ӹConventional ӹMandatory

• Advantages for issuers and investors• Pricing a convertible bond• How convertible bonds exist after issue• Asset swaps• The call component

■ Commercial Paper• Commercial paper programmes• The dealer panel• Pricing, investing and liquidity

■ Project Finance• an overview of project financing. • a typical project finance structure • the parties and their objectives • the key issues for lenders

■ Bank Loans• The typical bank loan• Security and covenants• Maturity and spreads

■ Syndicated Loans• What are syndicated loans?• How are they structured and sold?• Who invests in syndicated loans?• The advantages of syndication versus

self-negotiated loans ■ Private Placements

• What are private placements?• Who invests in private placements and

why?• How are private placements structured

and sold? ■ The Repo Market

• The government bond repo market• The corporate bond repo market• Classic repo• Central clearing, collateral, haircuts and

mark to market• Why use repo and reverse repo?

Case study: Issuing a corporate bond

■ In this exercise delegates will undertake the roles of the participants in a corporate bond syndication and will:• Liaise with investors to obtain orders• Place orders into the selling syndicate• Create and manage the “book of inter-

est”• Calculate the allocation and pricing for

book building

• Allocate the bonds and calculate the cost of funds for the issuer

Day Two:The objective of Day-2 is to ensure that participants understand yield curves and how to interpret them. Once participants are familiar with yield curves they will learn how to manage currency and interest rate risk. Finally, participants will learn about securitised products.

■ Yield curve construction• The government bench mark curve• The forward curve and the likely path of

rates in future ■ The likely cost of money for the borrower for

new bond issues ■ How credit spreads are set

• Loss given default• Expected default probability• Implied default probability

■ How to decide whether to issue a fixed cou-pon bond or an FRN• Your view of expected future interest rates

compared to the forward curve ■ Pricing a bond in the secondary market

• Which interest rate to use• Which credit spread to use• Building a discount factor• Cash flow mapping and discounting future

cash flows

Case study: Understanding yield curves, forward rates and credit spreads and pricing a corporate bond

■ Government bond risk management ■ Macaulay and Modified duration

• Definition and understanding• Applications• DV01 the key to trading, hedging and risk

management ■ Maturity ladders and portfolio management ■ How banks and portfolio managers run their

portfolios ■ Convexity

• Calculating• Applications

■ The complete view of risk• Maturity ladders• Duration and convexity• DV01

Exercise – Budgeting interest rate risk in a company

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The Debt Finance Training CourseContinued...

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■ Basic hedging tools for currency and inter-est rate risk management• Interest rate swaps• 90 day LIBOR Futures• Swaptions• FX Outright Forwards• FX Options• Currency Swaps

■ Types of exposure• Interest rate risk • Currency risk

ӹTransaction ӹTranslation ӹEconomic

Examples of how to hedge each type of risk using derivatives

Case study: hedging interest rate and FX transaction exposure using derivatives

Asset Securitisation ■ Structure of a typical securitisation deal

• The Asset pool

• The Special purpose vehicle• The Capital Structure

■ Types of securitisation• Residential mortgage backed securities• Auto loans• Credit card receivables• Collateralised loan obligations• Covered bonds

■ Structure properties• Weighted average ratings factors (WARF)• Historical default probabilities and receiv-

able arears• Credit enhancements and subordination

pre and post crisis• Portfolio returns

■ Funded and synthetic structures• Advantages and disadvantages

Case study: Building a collateralised loan obligation.

Participants will be provided with a pool of available assets and will be asked to build a CLO, calculate the WARF, build the capital structure, price the notes and calculate the expected return on first loss piece

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Valuing Commodity Companies and Sectors

In-House

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Course Overview

This advanced valuation and modelling course looks at the valuation approaches to be taken to enable participants to value sectors which may be at differing stages of development and growth profiles. Traditional valuation techniques assume a simple two or three stage growth profile and a terminal value or basic multiple based valuation tools. This course looks at some of the more difficult companies to value based on the underlying fundamentals of the sector in which the company operates.

The course covers commodity companies, identifying the issues with sectors such as resources, energy and chemicals companies. As well as discussed some of the current issues with traditional cash flow and multiple based valuation approaches the course will cover more advanced valuation approaches. The course will also consider the role of risk assessment in the valuation process and how macro-economic analysis can affect the valuation approach taken.

Examples are provided to illustrate each issue.

Participants will be required to bring a laptop to the course.

Overview of valuation approaches ■ Intrinsic valuation – traditional cash flow

techniques ■ Relative valuation – multiple based analysis ■ Probabilistic valuation – scenario analysis,

decision trees and simulations ■ Real options valuation – additional value

created through optionality

Other valuation issues ■ Assessing risk – the risky risk free rate and

other current valuation issues ■ The economic cycle – incorporating mac-

ro-economic factors into a valuation

Valuing commodity companies and sectors ■ Characteristics of commodity companies

ӹThe impact of global pricing – companies as price takers

■ Valuation issues• Base year fixation

ӹWhere do I start from and why? ӹDetermining the cycle starting point

• The macro point of view ӹThe demand and supply fundamentals

• Selective normalisation ӹHow do I get to mid cycle?

ӹSome key errors in cycle assessment ■ Valuing a cyclical business in practice

• Normalised valuations ӹTaking the cycle out of the equation

• The adaptive growth approach• Probabilistic approaches

ӹUsing probabilities to reduce forecasting limitations

• Normalised earnings multiples ӹBack to mid cycle…..

• Adaptive fundamentals• Real options for underdeveloped resources

ӹThe extraction/development decision and its value

• Valuing a natural resource firm


http://redcliffetraining.com/training/corporate-finance-training-courses/valuing-commodity-companies-and-sectors/

http://redcliffetraining.co.uk/training/corporate-finance-training-courses/valuing-commodity-companies-and-sectors/


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Secondary Equity Offerings - Structure & Regulation Update

In-House

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■Course Overview

This course looks at the way recent secondary equity offerings such as rights issues, open offers and placings have been undertaken on the London market and the regulations which apply to them. It also considers the advantages and disadvantages for the issuer of each type of offering.

In the last few years, the challenging conditions have led to developments in the structures for secondary equity offerings, with increased use of deep discount rights issues and cash box placings as well as the emergence of compensatory open offers, cornerstone investors and new underwriting procedures.

These structures are examined on the course together with the changes in listing and prospectus rules and pre-emption principles which have accompanied them and the further reviews which are underway.

Participants will:

■ Learn about the UK regulation for equity issues with an understanding of the Prospectus Rules and the Disclosure and Transparency Rules

■ Get to grips with the structures for UK equity offerings, in particular rights issues ■ Contrast rights issues with open offers ■ Get to grips with other potential structures for equity offerings, such as cash box placings ■ Appreciate the role of cornerstone investors ■ Understand the means of marketing shares, including internationally ■ Be taught about price setting mechanisms such as bookbuilding ■ Be introduced to the relevant legal agreements, such as underwriting and placing agreements ■ Learn which structure to use, e.g. fixed price vs. bookbuilding

Introduction

■ Current market trends

UK regulation for equity issues

■ Companies Acts and FSMA ■ Pre-Emption Group Statement of Principles

March 2015• Application of principles to companies/

issues• General disapplications• Financing acquisitions• Considerations for specific disapplications

■ Premium listing, Prospectus and Disclosure and Transparency Rules

■ Proposed changes to Prospectus Regime and Market Abuse Regulation

■ Structures for UK equity offerings ■ Rights issues

• Traditional and deep discount• Rise of fees• Rights Issue Fee Inquiry conclusions• OFT market study of equity underwriting

recommendations

• IMA Transaction Guidelines November 2014

• 2015 FCA market study of competition in investment banking market

• Shortened timetables ■ Open offers/ placings with clawback and

other placings ■ Recent structures

• Compensatory open offers• Cash box placings and rights/open offers• Other securities• Cornerstone investors

Means of marketing shares

■ Markets ■ Institutional and retail offerings ■ International tranches

• US issues ■ Pre-marketing and marketing


https://redcliffetraining.com/training/corporate-finance-training-courses/secondary-equity-offerings-course/



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Continued

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Price setting mechanisms

■ Fixed price ■ Bookbuilding

• The process• Accelerated bookbuilding• “Red herring” prospectus• Allocation, “Greenshoe” and stabilisation

Legal agreements

■ Underwriting agreements• Recent issues

■ Placing agreements

Which structure to use

■ Rights vs. open offer vs. placing ■ Fixed price vs. bookbuilding

Secondary Equity Offerings - Structure & Regulation Update


https://redcliffetraining.com/training/corporate-finance-training-courses/secondary-equity-offerings-course/



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The AIM Game-How to list on AIM and What Happens Next?

In-House

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Course Overview

AIM: “the most successful growth market in the world” (London Stock Exchange website) or ‘the Wild West’ of investment?

AIM, previously known as The Alternative Investment Market, was created to cater for the needs of smaller companies who could not meet the conditions for listing on the Main Market or preferred the less onerous regulation of the AIM Rules. Since its launch in 1995, over 3,650 companies have chosen to join AIM. However, in recent years AIM has seen a distinct lack of new issues and overall numbers have dropped below 1000.

Whilst the LSE agrees that the last couple of years have been difficult for the AIM market, it argues: “For a growth market like AIM, the ability of existing companies to come to the market for fresh funds is almost more important than the number of IPOs.”

This one-day course explores why companies opt for AIM as opposed to the Main Market, the process for floating under the AIM Rules and other legislation plus what life is like for an AIM listed company from a legal perspective.

The course is run by an ex-Clifford Chance and Gouldens corporate finance lawyer who during her career worked on a variety of Main Market and AIM listings.

The course will cover the following:

■ Reasons for choosing AIM ■ Conditions for admittance to AIM ■ How eligibility requirements compare with

the Main Market ■ Structuring Primary and Secondary share

issues on AIM ■ Prospectus and Admission Document re-

quirements under the Financial Services and Markets Act 2000 and the AIM Rules

■ The AIM Rules (as compared to aspects of the Listing, Prospectus, Disclosure and Transparency Rules)

■ Recent changes to the AIM Rules as a conse-quence of the Market Abuse Regulation

■ The role of the NOMAD (the Nominated Advisor) and Broker in advising a company quoted on AIM (and how this compares to the role of a Main Market Sponsor)

■ Corporate Governance regulation on AIM ■ Moving on from AIM to the Main Market ■ Practical examples of AIM successes and

failures ■ Likely future developments generally and as

a result of Brexit

Delegates will consider an AIM case study, taking an analytical look at key clauses from the relevant documentation relating to a float, placing and subsequent continuing obligations. Wherever possible, the usual negotiating positions of the parties will be highlighted together with the

regulatory requirements under the AIM Rules. Documentation reviewed will include the following:

■ Admission Document:• Form and layout• What needs to go in the cover pages• Rules governing the ‘front end’ (key infor-

mation, risk factors, business information and financials)

• ‘Back end’ requirements ■ Placing/Underwriting Agreement:

• Placing/underwriting obligations• Indemnity

■ NOMAD and Broker Agreement ■ Ancillary/supporting documentation, such as:

• Directors Duties’ memorandum• Responsibility Letters• Verification• Lock-up Agreements• Relationship Agreement

■ Regulatory announcements

Course notes will be provided together with exercises (and answers) relating to the topics discussed, useful web-links and a full list of documentation that may be required on an AIM float. Delegates may find it beneficial to bring a laptop or tablet to the course (although this is not essential).


https://redcliffetraining.com/training/corporate-finance-training-courses/the-aim-game-how-to-list-on-aim-course/


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Valuing Emerging Market CompaniesIn-House

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Course Overview

This programme has been designed to develop the participants’ understanding of the key issues facing Finance professionals valuing Emerging Market (EM) companies.

At the end of this programme, the participants will be able to:

■ Understand the key challenges arising from EM companies, namely currency volatility and coun-try risk premium;

■ Compute a Discounted Cash Flows (DCF) and trading multiples valuation of EM companies; ■ Analyse and choose appropriate currency in cash flow forecast and discount rate; ■ Decide on appropriate risk free rate, beta and country risk premium to be used in the discount

rate; ■ Perform a two-stage Terminal Value for high-growth EM companies; ■ Decide on sensible use of trading multiples in EM.

Case Study: The participants will use a variety of EM case studies and exercises during the training


Introduction ■ How does EM differ from developed markets

• Family-owned business• Inflation and growth rate• Country risks• Commodity risks• Lack of transparency• Corporate governance• Access to data

■ Are local trading multiples available? ■ Should DCF be the main source of value? ■ Key valuation issues to consider

• Choice of currency in forecast and dis-count rate

• Discount rate and country risk premium• Two-stage Terminal Value for high growth

with use of fades• Valuation discount necessary?

Information Gap and Accounting Standards ■ Access to data/financial statements ■ IFRS reporting or local GAAP? ■ Inflation accounting use in hyperinflation

countries

Currency Issues ■ EM country currency systems

• Pegged vs. floating exchange rate ■ Nominal or real cash flows ■ Currency volatility

• Exchange rate• Own purchaing power (inflation)

■ Choice of currency in valuation• Currency consistency - same currency in

forecasts as per discount rate ■ Local EM currency vs. standard (i.e, US$)

• Standard currency and use of Forward rates for foreign exchange conversion

Case Study I: Participants compute the Free Cash Flows of Tata Motors

Discount Rate - Cost of Debt ■ Risk free rate

• Any public traded bonds outstanding?

• Local currency or US$• Use of default spread with synthetic rating

■ Sovereign default rating ■ Pitfall of double-couting or triple-counting

risks

Discount Rate - Cost of Equity ■ Beta

• Beta reliable and liquid?• Use of ADR or GDR betas?• Choice of well-diversified global index

■ Country risk premium methods • Sovereign default spread method• Relative equity market volatility method• Composite method

Case Study II: Participants calculate betas and cost of equity for Gerdau Steel

Two-stage Terminal Value ■ Entire value in Terminal Value highly sensi-

tive to perpetuity growth rate and WAC ■ Alternative terminal value approach: value

driver• Disaggregating return on invested capital

- profitability and efficiency ■ Building a two-stage terminal value model

using separate annuity and perpetuity rates

Case Study II: Participants compute a two-stage Terminal Value of EM corporate

Trading Multiples in EM ■ Size of sample: less than a handful real

comparables? ■ Considering other EM regions ? ■ Using discount to developed markets trading

range

Overall Valuation Discounts ■ Significant risk from nationalization or ex-

propriation ■ Subjective discount or scientific method? ■ Use of decision trees and probability weight-

ing


https://redcliffetraining.com/training/corporate-finance-training-courses/valuing-emerging-market-companies/

The specialist in highly technical, market-driven banking and corporate finance training

web: redliffetraining.com email: [email protected] phone: +44 (0)20 7387 4484