Equity documentation phase in private equity buyout transactions
Equity documentation phase in private equity buyout transactions

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Equity documentation phase in private equity buyout transactions
  • Timing
  • What happens during this phase?
  • Key tasks for lawyers during this phase
  • Who does what?

This Practice Note is part of the Lexis®PSL Corporate private equity buyout transaction toolkit.


Preparation of a first draft of the investment agreement (IA) and articles of association (Articles) can begin at any time after the main commercial transaction terms have been agreed and the heads of terms (for the equity component of the transaction) have been signed. Often, though, commencement is delayed until the drafting of, and negotiations to agree, the share purchase agreement (SPA) are well advanced and the private equity investor has some certainty that the transaction will proceed before incurring further costs on documentation.

In addition, the due diligence and disclosure process will run concurrently with the drafting and negotiation of the IA and Articles. Warranty and indemnity cover in the IA is significantly lighter than that under an SPA, however the process is much the same.

Generally, the investor's lawyers will prepare the first draft of the IA and Articles and submit them to target management's lawyers for mark-up. Management will generally have its own independent advisers. Drafts will pass to and fro up until exchange (signing of the IA), which will be in advance of completion if there are conditions to completion or simultaneous with completion if there are no conditions to completion.

The seller will have little interest in this process, save in cases where