Diversion of corporate opportunity doctrine

Directors have a fiduciary duty to act in the best interests of the company they direct and its shareholders.  This duty owed by the directors (Directors) arise by virtue of the fiduciary relationship in equity between a director and the company and the Corporations Act 2001 (Cth)(Act).

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Legal issues of making financial forecasts in business

When a business is seeking to raise capital or advertise as being for sale financial forecasts are often made in a way so as to appeal to the target audience – investors or potential buyers.  In some cases however, the forecasts made do not translate into reality giving rise to potential legal consequences.  As forecasts are indicators often relied used by investors to make decisions on whether or not to invest, statements that are incorrect may amount to misleading and deceptive conduct under the Australian Consumer Law (ACL) (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) and have potentially serious legal consequences. [Read more…]

What is a term sheet?

A term sheet (Term Sheet) is a document that sets out the basic terms and conditions on which parties intend to enter into a commercial agreement.  Term Sheets are generally not intended to create legal relations between the parties but rather to form the basis of further discussions, which may be exclusive for a period of time and on a strictly confidential basis.  Once parties reach consensus on the commercial terms of a Term Sheet, a legally binding contract is then drawn up.

 

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Structuring contracts and capital gains tax

It seems that wherever you turn in Australian commercial transactions you are faced with a state or federal tax.   Capital Gains Tax (CGT) applies to a capital gain which is made upon a disposal of a CGT Asset, subject to specific exceptions and exemptions.  CGT forms part of income tax and is not considered a separate tax.  A capital loss cannot be claimed against income but can be used to reduce a capital gain in the same income year.  If capital losses exceed capital gains in an income year, they can generally be carried forward and deducted against capital gains in future years. [Read more…]

Roll ups in M&A transactions

A roll up (Roll Up) is generally thought of in the context of mergers and acquisitions is where a group of businesses are combined for the purpose of building an asset base capable of being listed on a stock exchange.  The reason for this is that the larger asset base is more likely to create an exit event in the form of an Initial Public Offer (IPO) more quickly than a business can grow organically.  Putting my MBA hat on the other benefit is the economies of scale that can be achieved because of having a centralised infrastructure and common branding (for example) usually in a common vertical market.  Whilst on the road to the goal, there exists the opportunity to leverage systems and infrastructure to extract synergies for the newly merged business.  The economic rationale for a Roll Up & List (Roll Up & List) is simple, all things being equal, shares which are readily tradeable on a stock exchange are generally more valuable than those that are illiquid.

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Queensland technology company exits

Mergers and acquisitions

For most entrepreneurs, the dream of building an enterprise and exiting is somewhat of the “Holy Grail“.  With the Holy Grail in mind, Brisbane and South East Queensland has been host to some significant technology business sales over last decade.  Below is a list of just some of the technology company exits which we are aware of and a link to the source where the sale was publicly reported:
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Planning a business acquisition

The series of articles entitled ‘Planning a business acquisition’ was written by Malcolm Burrows and has been licensed to Television Education Network Pty Ltd. A technical paper will accompany a Buying & Selling a Business DVD that will be released in October this year. The nine (9) part series was developed to educate those planning or evaluating a business acquisition.

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Assembling the advisory team

Part 1 – Planning a business acquisition

In the context of the Acquisition of a business an advisory team (Advisory Team) can take many forms. The reality is that not all attempted acquisitions are successful, therefore to maximise the probability of making a successful acquisition there are many factors to be considered in assembling the advisory team ranging from do you need one at all to what are the teams roles and responsibilities.

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Selecting and appointing the lead consultant

Part 2 – Planning a business acquisition

Selecting the lead consultant (Lead Consultant) will again depend on the nature of the Target, the characteristics of the Acquirer and the anticipated scope of work for the Advisory Team. There are many considerations in appointing the Lead Consultant however in our view, it is critical that they be given the appropriate resources and delegated the power[1] to effectively coordinate the activities of the Advisory Team. These factors are important to minimise costs and the time taken to successfully complete the Acquisition within budget.

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Should the Lead Consultant be a lawyer?

Part 3 – Planning a business acquisition

Declaration – the author of this paper is an admitted lawyer with a Principal Practicing Certificate admitted to practice in the Supreme Court of Queensland and the High Court of Australia.

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Dundas Lawyers
Street Address Suite 12, Level 9, 320 Adelaide Street Brisbane QLD 4001

Tel: 07 3221 0013

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