Some committees will provide you with a list of questions to answer and return before the interview. Your lawyer can help you indentify those questions that you don’t need to answer, usually on the basis that they are either irrelevant or, more likely, they are discriminatory. Age, gender, sexual orientation, relationship status, religious or political affiliation are all subjects that committees should not venture into. If they do, then politely ask why. If the reasons don’t stack up then don’t answer.
Management Rights - 101 Tips
After you’ve got the approval letter, the loan documents are produced next. When you receive the loan documents read them and the approval letter cover to cover – twice. Understand how the bank’s fees will be charged and, if at all possible, model them. Put together an excel spreadsheet with all of the banks’ fees and charges that are likely to apply, look at your business plan, spreadsheet your expected trading for at least the first and second year, apply the bank’s fees and charges, look at your cash flows and consider the real financial impacts.
Risk = impact x probability. It’s common sense that if the risk of a catastrophic event is infinitesimally small then you won’t design your whole business around avoiding that risk. Likewise, when you’re buying management rights you’ll be told there are a lot of risks, but you may not be told that the probability of some of them occurring approaches being infinitesimally small. Good lawyers will arm you with knowledge of each risk, the probability of each risk (in their experience) and suggestions on how to manage the risk. Bad ones will leave you scared and ignorant.
It’s human nature for a seller to try to optimise their sale price. It can be a wasted effort when it’s clear that some of the income being generated is unsustainable. While the buyer’s verifying accountant will only use 12 months’ worth of figures, most industry accountants will have conducted dozens, if not hundreds of verification reports. As such they will almost always spot unsustainable income and a price discussion will usually follow.
If you are going to be in the back woods of Botswana during the contract negotiation phase, then consider granting a power of attorney to someone you trust; such as your lawyer. Make sure the power of attorney is prepared and executed before you leave the country. A well drafted power of attorney, and a well instructed solicitor, can make contract execution as easy as the exchange of a few emails or satellite phone calls.