Gannons represented Draft House Holding Limited on the sale to BrewDog PLC for over £14.5 million plus deferred consideration.
Draft House was founded in 2009 when it opened its first bar in Battersea. Since then it has expanded to 13 bars in London and a further bar was opened in Milton Keynes. BrewDog acquired all 14 Draft House Bars and retained all 213 staff members.
Gannons represented the business being sold and its shareholders. How did we manage the company sale:
We drafted and reviewed the heads of terms which set the parameters of the deal.
The sellers were largely high net worth individuals. We needed to ensure that they were comfortable with the deal and liaise with them in order to secure the necessary shareholder consents required to complete. Many did not want to attend the completion meeting so we obtained powers of attorney so that the directors could sign the sale documentation on their behalf.
As Draft House had grown at such as rapid rate, in certain places the paperwork had to catch up with the company growth. Gannons worked with Draft House in order to overcome this hurdle by compiling missing records.
We had to ensure that the the entire SPA represented the deal the shareholders expected. We worked through commercial decisions where appropriate and negotiated solutions.
The sellers are liable for warranties. To cut down on the risk for the sellers we undertook a review of the data room to disclose against the warranties in appropriate cases thereby reducing the risk and size of any claim.
We dealt with exercising EMI prior to sale – we dealt with the procedures for exercising EMI options prior to completion. The option holders become shareholders of the Company immediately prior to the sale and received their share of the sale proceeds (when EMI options are exercised prior to completion, Companies often fail to consider that the EMI monies will be paid into the company and take account of how that will affect the completion accounts).
The restructuring of the Draft House subsidiary companies to remove from the Draft House group being sold certain companies the buyer did not wish to purchase was an important stage pre-sale. The restructure involved setting up a new special purpose vehicle. The transfer of shares in a subsidiary company to the special purpose vehicle was a distribution for tax purposes. The balance sheets had to reflect the distribution was within the powers of the directors. Under UK company law a solvency statement from the directors was required. The solvency statement required dealing with inter-company loans in an appropriate manner to avoid repercussions for the shareholders.
The targets used for the payment of deferred consideration required review. The deferred consideration was based on EBITDA and the sellers did not want expenditure post acquisition to be used to unfairly reduce EBITDA. We drafted various safeguards to protect the sellers.
The buyer acquired the business free of charges upon completion. In order for that to happen, Gannons liaised with the banks to discharge all charges and secure confirmation of discharge from the banks.
All Day, Tuesday 4th Sep 2018
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