7/29/2019 Herbert Smith Presentation for Lawyers

1/15

University of Cambridge

Corporate Workshop

An introduction to company law

The dual-track public listing/ private sale of thetrainline.com

7/29/2019 Herbert Smith Presentation for Lawyers

2/15

5113039 2

Workshop

Introduction

Companies

Buying, selling and listing companies

The proposed initial public offering (IPO) or sale of thetrainline.com

Role of the trainee solicitor

Questions

7/29/2019 Herbert Smith Presentation for Lawyers

3/15

5113039 3

Companies the body corporate

Separate legal entity

Owned by shareholders

Limited liability

Managed by the board of directors

Private companies

Public and listed companies

7/29/2019 Herbert Smith Presentation for Lawyers

4/15

5113039 4

Companies constitution and law

Shares and shareholder rights

voting

dividends control

Directors powers and duties

appointed by shareholders delegated power to run the company must act in the companys best interests must exercise skill and care

Memorandum and articles of association

Corporate law (e.g. The Companies Act 1985)

7/29/2019 Herbert Smith Presentation for Lawyers

5/15

5113039 5

Selling a private company

Preparation and vendor due diligence

The auction process

Principal documents

Share purchase agreement sale mechanics

warranties/ disclosure non-compete

Tax indemnity Other documents

Exchange of contracts and completion

7/29/2019 Herbert Smith Presentation for Lawyers

6/15

5113039 6

Initial public offerings (IPOs)

AKA listing, flotation, coming to market

Preparation and due diligence

Advisers involved

Why go public?

Principal document - the prospectus

Process prior to the IPO

Launching the IPO

7/29/2019 Herbert Smith Presentation for Lawyers

7/15

5113039 7

The dual track IPO or private sale of

thetrainline.com

7/29/2019 Herbert Smith Presentation for Lawyers

8/15

5113039 8

Parties ownership group

75%14%

11%

49%51%

7/29/2019 Herbert Smith Presentation for Lawyers

9/15

5113039 9

Overview

thetrainline.com started as a call-centre operation (1997) andthen added an online channel (1999), selling rail tickets on behalfof Virgin Rail Group

Sells tickets on behalf of most rail companies, and also operatesNational Rail Enquiries

Dual track process formally started March 2006 clientpreparation from late 2005

Shareholders (especially the majority shareholder, Virgin Group)

wanted to raise cash for other business ideas

7/29/2019 Herbert Smith Presentation for Lawyers

10/15

5113039 10

Why the dual track?

Creates competitive tension between the IPO and private sale: thebidders in the auction process know that the sellers have anotheroption

On the private sale side, price tension created amongst a numberof potential purchasers

Information memorandum sent to 21 potential bidders, both withinthe industry, and financial buyers (private equity)

But, more professional fees

7/29/2019 Herbert Smith Presentation for Lawyers

11/15

5113039 11

Timeline

Summer/ Autumn 2005: internal planning by clients

March 2006: Herbert Smith appointed

March-June: IPO and private sale preparations

May: stock market falls sharply

June: to be revealed

7/29/2019 Herbert Smith Presentation for Lawyers

12/15

5113039 12

Some factors affecting the decision

IPO:

Results in a wider shareholder base institution-only or include

the general public in the offer? Increased scrutiny of affairs (public reporting, regulation etc.) Perception of a listed company as being of substance Fluid market for shares post-IPO Access to capital markets for further funds

Uncertain valuation until immediately prior to launch

Private sale:

Known valuation Company remains private less public scrutiny Smaller shareholder base/ sole owner

7/29/2019 Herbert Smith Presentation for Lawyers

13/15

5113039 13

The Herbert Smith Team

Corporate

IT/ IP

Competition

Tax

Finance

Employment / Pensions

Share schemes

Real Estate

7/29/2019 Herbert Smith Presentation for Lawyers

14/15

5113039 14

The role of the trainee solicitor

Legal research

Legal due diligence

Draft documentation

Involvement in the disclosure process against warranties in SPA

Liaising with other internal/external professional teams/co-ordination and project management

Attendance at meetings

7/29/2019 Herbert Smith Presentation for Lawyers

15/15

5113039 15

Questions?