Geey – the author of ‘Done Deal’ and lawyer at Sheridans Sport – insists that a deal of this magnitude (estimated to be around £350m) is ‘very difficult’ to complete over a short period, with him revealing below why Sheikh Khaled’s takeover bid will be taking time.
It’s a long read, but here’s what he’s had to say to the Chronicle this week, explaining what’s likely to be going on behind the scenes in a bid to make sense of the delay – especially now we’re 20 days on from claims the BZG had ‘agreed terms’ with Mike Ashley:
“It’s very difficult to complete a deal of this magnitude in a short period of time,”
“There’s lots of different considerations that make that the case but ultimately there are likely to be two or three pretty important things that are going on in the meantime.
“Depending on the buyer’s appetite for risk there’s likely to be due diligence going on and usually that will be a pretty comprehensive process that takes place after the initial agreement is in place. That can take a significant period of time – I’ve seen due diligence reports which are a hundred pages or more – and usually that only starts once the outline agreement has been signed – and that is known as the Head of Terms.”
“If you’re looking at a timetable, the Head of Terms (what the BZG are said to have agreed) is really signed at a fairly early stage of the process,”
“A lot of takeovers are only announced – informally through leaks to the press or formally – when the process is quite far along.
“If it’s only the Head of Terms that has been signed here there may be a significant amount of time that passes before we ge the final part of the process. There are a lot of reasons why it might not happen quickly – it could be that something is discovered in due diligence.
“The price may be agreed in the Head of Terms but there will most likely be a degree of flexibility on what has been agreed in that document. If, for example, there are onerous contracts discovered in the due diligence or tax liabilities then it may mean the buying party may look to negotiate on the terms.”
“There is a lot to be negotiated between the Head of Terms and the Sales Purchase Agreement, which will include detailed information like the way the transaction is paid for, the size of instalments, whether there is any agreement on what happens if the TV deal goes up or if the club is relegated.
“And even at that point, there are Premier League processes to go through.”
“The fact is, no-one goes into this process lightly. It will cost a sizeable amount to anyone buying the club to fund lawyers and accountants to do due diligence and even Head of Terms. Anyone going into this part of the process would be serious about the transaction.”
“The earlier the deal can be done the better as it will be a risk factor for any buyer if they can’t implement their own recruitment strategy,” he says. “And that is before the Rafa Benitez situation is taken into account.”
“It is usually a fairly drawn out process and you’d expect that, as you would any commercial negotiation where there’s a lot of money at stake.”
This helps clarify the takeover process and allows us to understand why the Bin Zayed Group’s takeover bid may take time yet, however there are still a few things that don’t quite add up in light of this.
Firstly, doesn’t it seem slightly bizarre that the BZG have been adamant a deal is ‘imminent’ if they are not actually at the final stages of the takeover process?
And secondly, even if a deal does finally go through, you can’t help but wonder if the process began a little too late as far as our summer is concerned. After all, Rafa’s contract expires in a matter of days and the transfer window shuts in the first week of August this year.
If it all went through in the middle of July, could we expect Rafa to stay (he may have found another club by then?) and would we have enough time left in the window to do significant business in the transfer market?
This piece from Daniel Geey offers some much needed insight, but it’s now time we got answers from the club, with constant ‘no comments’ doing little to ease inevitable fears over Rafa Benitez’s future and a potential takeover.