The basics of corporate finance come down to the ways in which a business is funded – whether money is borrowed or invested, from whom it is borrowed and the terms on which it is being lent. Some of the elements which are covered in corporate finance law include:
- Mergers and acquisitions
- Private equity
- Venture finance
- Taking Security for investments
Mergers & Acquisitions
Two major elements in the world of corporate finance is corporate restructuring and Mergers and Acquisitions. Both involve bringing companies together in order to form a larger company, although a merger combines the two businesses while an acquisition involves one company purchasing another.
While some mergers and acquisitions make the news because the companies involves are huge household names, M&As can involve companies in any sector and of any size. Specialist legal guidance is always required during a merger or acquisition due to the complex legal requirements and the large sums of money involved. A specialist corporate finance solicitor can help with many elements of the process including the planning, analysis and preparation as well as the execution of the transaction. Corporate finance specialists can also ensure that the critical decisions which need to be made as part of the process are within the boundaries of the law.
The term “private equity” refers to either long term or medium term finance which is given to a company in exchange for an equity stake in a potentially high growth company. Typically, a private equity investment will support a management buyout or a buy-in in the case of a mature company, helping to drive sustainable growth of the business by offering operational expertise and sound management. A specialist corporate finance solicitor can ensure that any private equity venture operates smoothly and compliantly.
One area of corporate finance law which is vital to businesses at an early stage of their development is venture capital, which can provide operational expertise as well as finance for start-ups and entrepreneurs, primarily within the technology sector. Although venture capital and private equity are very similar, in legal terms there is a difference with regard to the company’s age. Venture capital is focused on investments in a new company whereas private equity is exclusively for mature companies with a history of growth potential. Whether companies are seeking venture capital to grow their sales or manufacturing operation, to expand their company and hire staff or whether to enhance product development, a specialist solicitor in the corporate law sector will ensure that everything goes without a hitch and can draw up appropriate legal agreements to the satisfaction of both parties.
The finance and banking industry is a global one, encompassing a broad spectrum of financial products from a simple bank loan to highly structured arrangements across several jurisdictions. As companies are rapidly becoming increasingly international and financing structures are becoming ever-more sophisticated, the sector of modern banking legal practice is becoming more complex all the time and specialist help is essential for companies who want to avoid falling foul of current legislation and compliance regulations.
Taking Security For Investments
When a company borrows money from a lender, security is usually required in terms of the business’ assets. By taking security over those assets, the lender can, should the borrower become insolvent, take the assert and sell it in order to repay the money owed. In legal terms, the lender can either take security over all the company’s assets with floating or fixed charges or only over specified assets. A specialist corporate finance solicitor can ensure that all paperwork is drafted correctly and that the business owner fully understands their obligations.
How We Can Help
Our corporate finance team of specialist solicitors are able to help with a number of areas of corporate finance law including:
Private equity and finance transactions
Legal elements of company investment and equity funding including expansion and development capital
Flotations and public offerings
Preparing offer documentation
Ensuring compliance with regulation including the FSMA and regulations which relate to offers of securities to the public
Security and loan arrangements
Drafting of call and put option
Negotiation and preparation of interests including convertible securities, preference shares, share classes and share options
Re-registering of public companies to private and vice versa