A change of control is one kind of agreement where a party has some rights including payment, consent and termination. This is regarding the change of the opposing party and the ownership as well. Actually, you cannot find any kinds of the solid definition of this term. Each and every agreement needs to be rechecked and reviewed carefully. You will have to see that the proposed transaction is possibly enough to warrant a change of control. It is important to give necessary protection to every employee at the time of changing ownership of a company or a business organization.

What is it?

In the finance industry, this changing control happens while there is a material change in the ownership of a particular company or business organization. This kind of change can vary and define by law and some other contractual agreements.

In creditor agreements: This changing control includes protecting a lender while a company comes under the new ownership criteria. These clauses are necessary while the new owner of the company can change the risk profile of a firm.

In employment agreements: Senior executives have some clause in the agreement of their employment. These kinds of agreements can protect them from the termination problems and risks. If the material change and the ownership change can result in them being terminated and fired, then this clause or agreement can save them by giving them a proper and significant pay out in the case of termination.

How does this changing provision operate?

In general, there are some common transactions where this change can be triggered. These are such as follows:

• Transfer the stock percentage of a company. This method of transforming is being involved around a specific percentage. Many times the share is being transferred from the main company to a newly acquired company or an organization. This may grow up to 50% but sometimes the calculation goes up or down as well.
• Sale of the majority assets and all. This change of control can include all types of sale and it can also target the company’s assets as well. The transaction of the sale is a risky process under this changing situation.
• This changing criterion is also very much important at the time of merging. This happens at the time of merging a company with others.
• This changing situation is also very much important in some other events such as reorganizations, consolidations and other kinds of transactions. In this case, the 50% of board members are changed.
• The affiliate transaction happens where the acquirer of the stock, rights and assets is an affiliate of the target company. Many companies have complex and tough ownership structure. These types of structures can move their rights and assets.

Acquisition and merges:

In case of a commercial agreement, the parties have to focus on the main business rules and regulations. They do not need to focus on the changing control. These kinds of provisions are attached at the last of the agreement and these are not taken seriously. This can complicate any future acquisitions while the parties try to sell their business acquisitions.

This can cause a large increase while it comes to the cost of acquisition. It can also lower the cost holder’s consideration. The corporate lawyer in this case can look after any agreements that exist. They will also consider the structure of the acquisition in order to maximize any kinds of assets of the organization or the firm while they are combined. The corporate lawyer can resolve any kinds of problems of a company or a business firm. In the merging and acquisition process, it is important to handle the matter of changing control. The lawyer can arrange executive compensation arrangements for both companies and parties.

Why are the changes in control arrangements provided?

This control arrangement is provided from the following reasons. These reasons are such as follows:

Keep the executive neutral: the main and primary purpose of this arrangement is to keep the senior employees focused on all kinds of particular corporate transactions and other kinds of activities as well. The transaction may also result in their own job loss.

Competitiveness: Many companies provide this kind of protection to some senior executives and employees. It is provided in order to retain the best and possible talent of a company or business firm.

Fairness: These types of control management can provide the possible financial security to the senior-most employees and executives. This will be beneficial at the time of job loss. It is also intended to provide them the adequate time in order to find qualifying and comparable employment for the company and business organization.

Various triggers:

This kind of arrangement is typically fell under three categories. These are such as follows:

Single trigger: Very few and small companies have single trigger cash severance advantages. This single trigger is being discarded due to the double trigger advocacy of the shareholders.

Double trigger: It is provided at the time of change in control arrangements and qualified termination as well. It is one kind of most common approaches for change in control severance.

Modified single trigger: This is actually a hybrid of the single and double trigger. These types of triggers are specially used in the small and minor companies.

This method will ensure the termination right, consents and payments as well. The contract for the senior executives is filled with a change of control agreement. This kind of agreement can enhance the protection against the sudden termination and save the senior executives at the time of firing. This should include on behalf of any such companies. The management should also look at this matter. They should take the necessary steps in order to ensure the protection for the senior employees. It will change the security management system and ensure the significant pay out to the employees as well. You can also check this matter with open up discussion and communication. In this way, the organization will also move forward with high and innovative administrative structures. It will also bring a bigger profit to a company or a business organization.

Here’s what you should know about an EOI

What do you mean by EOI?

Have you already heard about this term i.e. EOI? Well, EOI stands for Expression of Interest and this term is specifically used in the initial transaction documents when a buyer is interested to acquire a seller’s company. EOI also ensures that the buyer is interested and ready to pay a certain amount of valuation to the seller
This term is quite popular in the field of M&A deals. By mentioning EOI, the buyer showcases that party has serious interests to acquire the seller’s firm or company through a formal process. .

Therefore, EOI is an extremely important part in the introductory phases of any M&A deal agreement. As mentioned, it specifies that the buyer is interested to acquire the seller’s company in order to take it for further betterments and higher accomplishments. In this context, if you are now keen to know more about EOI or Expression of Interest, then you have definitely landed on the right page. So, please continue checking the following sections to know more about EOI and its contents.

Reveal the Contents of EOI

Whether you’re a seller or a buyer and you are interested to use an EOI, then make sure to know more about its contents (as described in the below sections).

1) Purchase Price: It is an important part of the EOI document. The basic purpose of the EOI is that the buyer is interested to acquire the seller’s company and close the deal. That’s why EOI must include the total payable or purchase amount which includes complete valuations and payments for bonuses, ESOPs, and all other related items that are issued by a seller.

In this case, please note that the buyer has the right to change or modify the payment terms and considerations. What’s more, the buyer may decide not to proceed with the transaction. That’s primarily because — the document shows only an expression of interest and it’s a non-binding document for both parties.

2) Valuation Methodology: EOI also ensures to mention the key valuation methodology as well. The key assumptions that are used to make this valuation should also be mentioned in EOI. For example, EOI should ensure the following assumptions:

The historical financials that are presented by the seller should be accurate and complete.The projections that the seller has provided must be fair and accurate.All the contracts i.e. employment contracts, vendor contracts, facilities contracts, and customer contracts must be transferred to the buyer without any additional payment.

3) Due Diligence: Conducting due diligence is an important part of completing a successful deal. For example, it should highlight the following areas of a business, such as Business, Legal, Customer Contracts, Finance, Sales and Marketing, Vendor Contracts, Facility, Human Resources, Plant, Machinery, and Technology. EOI checks for the due diligence of all of these above-mentioned business areas.

4) Transaction Structure: Another content of an EOI can be the transaction structure. Please note that the transaction structure is important for both buyer and seller. It indicates whether the buyer is opting for a complete buyout or they are most interested in carving out a particular division. Also, if the buyer is interested in purchasing some particular type of assets and contracts, then that should be mentioned here too. Additionally, the transaction structure part of an EOI should mention how the buyer is going to fund the entire purchase price of the transaction. For example, it can be in the form of a cash balance or bank loan.

5) Management Retention Plan: This part can be also mentioned in an EOI. It implies whether the buyer is interested in retaining the management level positions as it has been earlier or the buyer is more interested in re-organizing and re-arranging everything.

6) Approvals Needed for the Transaction: For closing the deal, the buyer will definitely need the sign-off from the board of directors. Therefore, EOI may include that part too so that the seller can also know about it. Additionally, properly timelines for obtaining such approvals can be mentioned as well.

7) Transition and Support Services: It may be possible that the buyer may require some transition and support services for a certain time of time from the buyer. In such cases, no additional costs will be borne by the buyer apart from the previously decided purchase price for such services.

8) Conduct of Business: It’s expected that the seller will conduct the business as per the normal state. In any case, if the seller wants to change this, then the change must be intimated to the buyer as well. This condition of effective conduct of business must be mentioned in EOI.

9) Confidentiality: This is the rule of confidentiality that should be included in an EOI. It implies that the seller can not disclose the name of the buyer’s company and the purchase consideration to any third party without the written consent and approval from the buyer. After all the definitive agreements are sealed and signed-off, then only the seller can reveal such details publicly.

10) Transaction Expenses: In an EOI, it’s clearly emphasized any transaction expenses need to be borne by the individual party on its own. Such transaction expenses can be related to the following areas of a business, such as negotiation, due diligence, legal support, professional support, and drafting of all legal agreements.

11) Non-Binding Agreement: EOI must ensure to mention this part too i.e. it’s basically a non-binding agreement. To be more precise, it’s an expression of interest. Of course, no party is liable to close and sign-off the deal. And, neither the seller or the buyer will be allowed to file any legal case of damage for providing an EOI.

The Final Verdict:

This is another term that we can see in company stocks analysis.

With this, you have revealed a brief overview of EOI and its contents. All of these above-mentioned eleven factors can be mentioned in an EOI. Apart from that, there will be the last paragraph of thanking note where the buyer will like to thank the seller for creating a sale opportunity for them. Plus, the buyer’s contact details should be also mentioned in an EOI (Expression of Interest) so that the buyer can opt for further discussion, communication, and clarification.

Understanding Founding Partner

Are you looking for an article that has all the information about the founding partner? If yes, then finally your search is over. In this article, you will get all the information regarding the founding partner. And some of the frequently asked questions regarding the founding partner are also mentioned. So if this sounds interesting, then keep reading this article. Now without wasting any time, let’s jump into the main deal.

What is a Founding Partner?

Founding director definition : Founding partner is a term that used to characterize the shareholders of an organization, firm, or company, which is sold to an equity-backed platform company on the very first roll-up. The normal procedure is that the platform company follows is the purchasing of a large organization that has strong people in the management area and powerful infrastructure, the bolt-on acquisitions are added after that. Before the occurrence of the price change in the stocks and mergers, the first entity shareholders or you can say, people who have bought the stocks in the initial big company, known as founding partners.

Understanding Roll-up and Bolt-on Acquisitions

Though the basic definition is mentioned above, but you will have to understand roll-up and bolt-up terms first, if you want to get a better idea about founding partners. When different small companies collaborate or collide together, then a bigger company is formed, considered as a roll-up. Generally when the market place is fragmented and all the similar companies, which compete do not have adequate means and resources to dominate or stand up alone in the market, then roll-ups happen. It is also known as consolidation. In majority of the cases, the first to initiate a roll-up is a bigger company that has an important role in market. This bigger company works with a private equity firm and rolls-up with the other low scale firms or companies, trading the same services and products.

After that, for the growth and to dominate the market and to expand the presence of the company in the market, bolt-on acquisitions are added to the larger company (platform). Generally, all the other small companies that have products and services and the small companies that are already consolidated are chosen by the private equity company, which started the consolidation. All the small companies that want to grow in the market but have limited means are bolt-on acquisitions. Though these companies have limited resources but they can offer geographical divarication or technological benefit to the main platform company.

Founding Partner Expansion

One of the most important things during a roll-up is that the shareholders must get in at the ground level. When the founding partners purchase the stocks at the original or initial price, then it is known as being on board soon or early. Due to the late joining, the bolt-on companies’ shareholders get the stock at a higher price as the firm starts growing and the stock prices increases. If the platform company dominates the market, everything in the roll-up process flows in a smooth manner and shares are revalued higher by the private equity company, then prices of the stock of the entire company increases.

It also indicates that the founding partner will also see less dilution to their own stock’s value. When the company does more transaction and with each finalized acquisition, less high-value stocks are required with each deal. Another important thing is that together with the benefits of increased stock valuation, it is also possible that founding partners can also hold a position in the management section or team. And founding partners can also sometimes fill the board seats in the platform company. At last, it is very beneficial to be a founding partner both in terms of placement and finance.

Some Frequently Asked Questions

So after covering all the fundamental information regarding founding partner, it’s time to answer some of the most asked questions:

1- How to Find a Founder Partner?

If you want to find a founder partner, then here are some ways that you can try:

• You should attend entrepreneurial meet-ups

• You can also join online groups on LinkedIn or Facebook

• Start with your friends and family

2- Difference between Co-founder and Founding Partner?

The main difference is that a co-founder is a person that is in the business from its very starting days and the founding partner is a co-founder of a partnership that is structured like a law firm or any other company.

3. Founding partner vs managing partner
Founding partner can be managing partner. The managing partner has two main roles: working as a partner (founding partner) doing business, and as the general manager. Difference is in roles because managing partner has one more additional task – to do day to day activities, manage. There are difference in payment too – founding partner will receive a distributive share of the partnership income every year and managing partner will get additional guaranteed payment, for management duties for the partnership.

General Partner in Business – Meaning and Definition

A general partner is an investor in a company who has unlimited liability and is responsible for his portion of all contract obligations.In each partnership, there could be more than one general partner. As a representative or an associate, a general partner is also a managing director or an involved partner accountable for the management of the GP finance. This article will clearly explain the working and operation of a general partner.

Definition of a General Partner

General partnerships finance or GP finance are entirely made up of general partners. It ensures that all parties are unrestricted responsible for the actions of relationships. In other words, a client may not only sue for the company’s business property but also sue for his personal property against a general partner. As unlimited liability exists for general partners, they might lose business and all personal assets.

A general partner will have power without the consent or knowledge of the other partners to act on behalf of the company. The general partner may have unlimited liability for the company’s liabilities, unlike restricted or silent Partners. This is the primary reason for inventing limited liability partnerships. Most people wanted to go into business but did not want a relationship to be held responsible. There must be at least one general partner for a limited liability partnership. As in a general partnership, this party assumes total liability.

Working of General Partners

It ensures that their trust in the business can only be destroyed. If a limited liability business was sued by the same customer, the business and only the general partner could sue its assets. The joint partners are not subject to personal charges. This organization promotes people to start companies.

It’s not all negative to be a general partner. General partners are entitled to run and decide on the company. Both these things can not be applied by law with joint partners. Clearly, shareholders are exclusive collaborators. General collaborators typically provide the companies with advanced know-how and expertise and add to their network of connections and customers. Since the general partners share management responsibilities, they each have more time to spend on professional tasks.

Disadvantages

For obligations of the partnership, a general partner may personally be blamed. For instance, a patient may seek medical harassment for a doctor. In some instances, the courts permitted the client to take action in the area of clinical practice against every general associates.

If the court makes a decision in support of the company, it would be the responsibility of all general partners. In reality, the general partner with the most capital invested in the company could take a higher share than the general partner whose supposed misconduct contributed to the litigation. If a general partner is ever required to fulfill the financial obligations of the partnership, its personal assets may be liquidated.

Final Verdict

This article shows that a general partner is an investor in a company and is a shareholder in its profits. So, a GP finance agreement is required between the partners to run a successful business together.

Investment Criteria for Success with Investments

Investment Criteria

Investment criteria is known as information that helps the buyer to access a complete acquisition target. This is a very important method used for buyers that are sophisticated. In this type of situation, buyers typically have two sets of criteria they analyze. The first aspect they consider are parameters that are disclosed publicly to institutions such as investment banks. The main reason for this is to properly inform investment bankers in regards to what the buyer is looking for. This is a very important factor for ensuring that the deal fits the buyer’s needs. The second aspect involves parameters developed specifically for internal review. This can help the buyer to determine whether or not the total acquisition should be pushed further in the process. These are the two main aspects/ criteria analyzed during the investment process.

It is important to note that the most commonly disclosed information/ investment criteria is size of the investment and industry. Some buyers disclose other information relating to the investment such as investment type. The investment type may also include management buyouts as well as other opportunities. Investment criteria is effectively used in many different situations. Using investment criteria is one of the main ways that buyers are able to quickly assess/ determine acquisition opportunity. Buyer’s main goal is to determine accurate acquisition opportunity. This is one of the most strategic methods for ensuring the investment is worth the buyer’s resources. This is the most common method in the industry for evaluation acquisition deals/ potential partnerships.

Sourcing and qualifying a range of new opportunities is completed more efficiently with the use of investment criteria. An example of this is private equity firms. Private equity firms can view over 100 companies before settling on one for an investment. If the investment criteria is clearly outlined and carefully constructed, the process moves along much faster for all parties involved. The process can be completed with less time as a result of clearly logged information on each company/ acquisition details.

If the investment criteria is disclosed to the public, the purpose is for generate deal flow. There are different reasons why investment criteria is disclosed either publicly or privately. The outcome is different in both of these scenarios. After the details of the deal have been compiled and analyzed, the next step is to consider the investment criteria that have been gathered. If the investment criteria is a match, an expression of interest may be authorized. A letter of intent may will also be issued if the investment criteria matches. A letter of intent may also be known as an LOI. An expression of intent may also an EOI. These are the two primary methods used after the initial evaluation has been completed.

There is also internal investment criteria that can be used such as overall strength of the management team, estimated IRR for a specific investment, customer diversification as well as other criteria that involves the investment. The main goal of this is to provide benefit when it comes to investment criteria.

There are one question – What criteria are used for making choice of investment ?

So I need to give example from trading industry !

Top Investment Criteria to consider when selecting stocks

The goal of every investor is to invest successfully. Well, before you start emptying your account to invest somewhere it is important to know that you need to research adequately. Today, everything has been made easy because the statistics and evaluation of a company are just at your disposal. All you need to do is to take time and do extensive research on various stocks that will bring good returns when you Invest. Investors who invest blindly end up losing a lot of money. Therefore, to be on the safe side there is a need to have a criterion on the way you will invest in the stock. Therefore I have provided criteria to help you choose the right stock to invest. Read on and find out.

Good current and projected profitability – Investment Criteria

The most important step to take when choosing the right stock is by looking at the company’s profile. This will help you to get some insights into their earnings, cash flow, and operating margins. By doing this you will have a wholesome statistics of the financial health of the company. Well, why do you think all that is necessary? Time and again investors have been subjected to a rude shock when they invest and incur huge loses. That is why the reliability of the company stocks should help you form a basis in decision making.

The company’s earnings will help you to know the reliability and how the company operates. It is vital to access cash per share to ensure you are investing in something profitable. Ensure you analyze the trend of the shares so that you can invest appropriately. However, it might take time for you to realize the profits but the most important thing is to check on the trends. Despite the time, it will take it is better to make profits out of your investment.

Earnings Momentum – Investment Criteria

As I had earlier said the earnings of a particular company form the basis of knowing the reliability and how the company operates. However, most investors have a weakness whereby they are more concerned with the current earnings of the company. This might give you false speculation because that could be the peak point of the earnings over a long time. So what should you do to make the right decision? Well, it is essential to be flexible and look at the earnings momentum of the company. Check if there is growth. Study these patterns by looking back at the company’s performance.

You can inquire for earning reports alongside reading analysis and future projections. This will help you to tell if the company is operating under pressure. For instance, if in the past five years it has posted the best earnings to years ago then that tells you that you are not guaranteed what the future holds. Some companies are not predictable which makes it risky to invest with them. It is better to settle on a company that is stable enough to help you make something out of your investment.

Asset utilization – Investment Criteria

Most companies have respective favorable asset utilization. Companies have a system in place that allows them to have assets to boost its financial performance. Therefore, this ratio gives the expected revenue earned from every asset that the company owns. This percentage varies from one company to another. For instance of a company if a company has an asset utilization ratio of 30 percent. It implies that it is getting approximately 30 cents for each dollar of assets that it owns. This can be likened to operating margin because all serve as parameters of knowing the company’s efficiency with time.

The importance of knowing the favorable asset utilization is to help you to know the duration and amount of your investment. It is easy to speculate on the returns. Companies that have more assets open up earning avenues which imply it is easy on your side to make a profit on your stocks.

Consider intrinsic value on your stocks – Investment Criteria

Considering intrinsic value is obtained through a series of complex evaluation models. It gives the real value of particular stocks which vary greatly with the market value. The importance of knowing the intrinsic value is to help you gain a better ground when choosing the right stock. It is always wise to settle for stock which has higher intrinsic value than the market value which will influence eventual price growth. Market value is often influenced by behavioral and investing factors which might fluctuate as time goes. As an investor, you would want a stable business platform that you can preconceive the expected returns on your stock.

Conservative Capital Structure – Investment Criteria

A company has conservative Capital Structure which determines the way it funds its business operations using equity and debt. This determines if the company can have short term liquidity and at the same time it covers operation finances without necessarily have to increase long term debt. This information will help you make a good choice when it comes to stocks that are worth investing in.

Investors use calculations and indicators to access the value and growth of stocks. These include Earning per share helps to compare companies that you can invest and get profits in return. Price to earnings ratio can help you to evaluate the relationship between the company’s stock and earnings which can be used to know earning per share. Dividents payout ration also helps investors to know what the company pays through dividends with what you can earn through the stocks.

These indicators will greatly help to enhance decision making when choosing stocks. The most important thing is to familiarize yourself with the information that pertains to stock markets. Don’t blindly invest where it will be hard to get the returns.

Conclusion

Every investor is usually optimistic to get a good profit from their investments. Well, as an investor your financial success depends on how you invest wisely. The criteria that I have listed in this article are simple and straightforward. You can also seek out professional advice from financial firms to help you understand more about stocks. Therefore, always do a comparative study between the companies and settle on the one which has a promising future. This is because companies face stiff competition which explains why you need to research well on stocks.

Of course, each industry has its own criteria such as investment criteria in project management or investment criteria in economic development etc. Criteria are different but principles are the same !