Part V: Material Deal Terms to Negotiate in Private Equity Transactions
This is the fifth article in our series on “Closing a Private Equity Transaction.” In Part I, the benefits of preparing for a transaction were explained, along with how best to prepare. In Part II, the letter of intent was discussed, and key terms were identified. In Part III, we walked through what to expect during the due diligence process. In Part IV, we outlined the various healthcare regulatory issues that arise in private equity transactions. Here, we highlight some of the more material terms typically negotiated in the definitive transaction documents.
The primary definitive document will be the purchase agreement (which will either be an asset purchase agreement or a stock purchase agreement, depending on the structure of the transaction). The first step will be to confirm the agreement contains the various terms negotiated in the letter of intent. (See Part II for a discussion of the terms that should be negotiated.) While the LOI will cover the major deal terms, the purchase agreement will expand upon those terms in more detail, and include other provisions necessary to effectuate the transaction.