Deal Structure

Investing requires clear processes to ensure that the interests between your business and your investors are aligned and to reduce risks for both you and your investor(s). It is essential that the appropriate documents are completed so that you remain within the limits of the securities laws.

Azione supports deal structuring through the following documents:

Term Sheet

Also known as a letter of intent or memorandum of understanding, this is a document which sets out the main terms of the proposed investment and any pre-conditions to the making of the investment. Whilst generally not legally binding, drawing up a term sheet helps to provide clarity for all parties as to the terms of the deal at an early stage of the process and is a useful basis for ensuring that relevant due diligence is covered and key aspects of the investment are understood between you and the investors, before detailed drafting and negotiation of the legal documents takes place. It is important to keep the term sheet as simple as possible in order to avoid protracted negotiations.

Key Legal Documents

Once the investment terms have been agreed, Azione ensures that they are integrated into the legal documents which will typically comprise those set out below:

  • Investment and Shareholders’ Agreement – This document sets out the terms of the investment and regulates the relationship of the shareholders once the investment has been completed. It will address the specific rights of the investor(s), such as rights to appoint directors, to receive information on the business, and to veto certain actions of the company.
  • Articles of Association – New articles of association are adopted on completion of the funding which will set out the company’s internal regulations and deal with its management and administration. They deal with matters such as transfers of shares, dividends, and voting rights, and complement the investment and shareholders’ agreement.
  • Disclosure Letter – The disclosure letter sets out disclosures against the warranties contained in the investment and shareholders’ agreement. Warranties and disclosure are key elements of the transaction documents and will be contractually binding on the parties. This can help to ensure that specific and detailed disclosures are made by the company as opposed to the often general responses which due diligence can reveal.