Getting your house in order – Top tips for seamless share-sale energy deals

What are you selling?

Is the Target incorporated and will any pre-closing corporate restructuring be required? Does the Target already hold all the relevant project rights and other rights and assets expected?

If any assets or project rights need to be secured prior to closing of the transaction, be realistic about the timeframe and the issues that might be encountered.

Who will be involved in the sale?

If there are multiple shareholders of the Target, ensure that everyone is on the same page with regards to the deal structure and strategy. If there are funding arrangements in place, consider how these will affect the deal timeline. Early involvement of any funder will be key for a successful deal process.

Consider the tax and financial position

Your tax and financial position is likely to be a key driver for the deal structure and timeline, and you need to be clear about these prior to going out to market.

Gather the core documents (depending on the stage of your project):

1. • Corporate – articles, statutory registers and any JV/shareholder/investment or similar agreements.
   • Tax/financials – tax returns, details of shareholder loans and liabilities incurred by the Target.
   • Grid – all application, offer and acceptance documents and correspondence, network constraints and SOWs.
   • Planning – planning application or planning permission (and evidence of discharge of conditions).
   • Land – option/lease/easement and/or other necessary property rights (for example wayleaves or licences).
   • Construction – contracts or agreed HOTs as applicable.

Technical paperwork and document collation is a critical defence against potential liabilities and value erosion. With increasing buy-side focus on in-depth due diligence, time invested by sell-side teams here will overcome what can be the most significant challenges of the deal process – maintaining buyer confidence and negotiations around buyer protections in the deal documents.

Organise your documents

Buyers are looking to establish a clear picture of the project rights held by the Target. Providing buyers will a full, complete and organised document suite will streamline the diligence process and support a seller’s position through wider negotiations; for example, documents that are obsolete and agreements that have been superseded, do not have to be included in the deal room.

Choose a deal room platform

Deal rooms are not all created equal. Better deal rooms may be more expensive, however they can lead to considerable cost savings in the long run.

There is no need to wait for the buyer to request corrections through the diligence process. Where there are issues, such as the ones set out below, engage your advisors to the extent the issue has already been identified and a strategy agreed prior to the deal process. It will always be crucial to present to a buyer how issues that have been identified will be addressed either pre or post-closing while being mindful and across the wider deal strategy agreed between the seller and their advisory team.

Common issues we come across, include:

• Project rights/agreements/etc. have not been novated to the Target or agreements have not been correctly executed or adopted.
• Obligation on project counterparties’ to enter into a direct agreement and/or provide a collateral warranty to a funder are absent from material agreements.
• Payment obligations have not been complied with, creating a risk of termination of material agreements.
• Where a planning permission has been implemented there is no evidence of discharge of the planning conditions.
• Corporate documents and statutory requirements relating to company documents and share ownership are lacking or absent.
• Inter-group asset transfers, allocation of asset rights or wider re-organisations have not been implemented correctly, creating additional inter-group liabilities or debt not previously considered.

Your advisory team will be key to how well the deal progresses. The earlier they can be involved and integrated with your internal deal team, the more time they will have to organise workstreams, address any issues, minimise obstacles and agree strategy.