LEGAL ENGLISH KNOWLEDGE
* The important vocabulary in legal English is highlighted for you in bold. These are individual words that you need to know.
* The important prepositions in legal English are underlined. Prepositions are important. They need to be correct in order for your English language skills to be accurate.
1. COMPANY ACQUISITIONS
Acquisitions of private companies fall into two main categories. There are Trade Sales and Buy-outs. A trade sale is a sale where the buyer is another business, often in the same area of commercial activity to the target business. Funding in this situation is provided by the buyer, often from bank finance. A buy-out is an acquisition funded by one or several private equity investors. There are different types of buy-out. These are:
* Management Buy-Outs (MBOs)
* Management Buy-Ins (MBIs)
* Secondary Buy-Outs (SBOs)
The parties to an acquisition must make a decision about whether to structure the deal as a share or an asset acquisition.
2. SHARE ACQUISITIONS
A share acquisition involves the acquisition of shares in the company from the selling shareholders. The selling shareholders may be individuals, corporations or trustees. This means that all assets and liabilities are acquired along with the shares. However, the legal team can negotiate the removal of certain assets or liabilities prior to the acquisition. This is sometimes called a ‘carve out’. To make such a carve out effective, all excluded assets and liabilities have to be transferred out of the target company before the acquisition. Liabilities that are not transferred out need to be the subject of extremely comprehensive indemnity from the seller. A company will often have assets and liabilities that are unknown. This is why the process of due diligence is absolutely vital.
3. ASSET SALES
The major difference between a share acquisition and an asset acquisition is that in an asset acquisition, only identified assets and liabilities which the buyer agrees to purchase are acquired. This means that the buyer can carry out a process of ‘cherry-picking’ – buying only those assets and liabilities which it knows about and is prepared to purchase. These are usually listed in full in schedules to the sale agreement.
If you are considering a career in Law, it is imperative that the English for law courses you choose meet the real needs of lawyers and law students who have to deal with contracts, letters, e-mails, meetings and negotiations in English.