Step-by-step guide to the inside story of a takeover
It’s a process that has been at the forefront of the minds of Sunderland fans for well over a year now – but how does a takeover REALLY happen?
Following weekend rep o rt s o f f re s h i nte re s t i n the club, and Jim Rodwell’s confirmation that the club remain in exclusivity with a party, hopes have been raised that a deal could be completed in the near future.
But at times, the process of buying a club can seem quite opaque – leaving supporters in the dark over what is happening.
So how does a takeover get done, and what steps are left to be cleared in the proposed deal involving Sunderland?
INITIAL INTEREST
There are hundreds of people – some genuine, some not so – interested in buying football clubs, and their first steps are to make their interest known to the club.
This can often be done through an agent or intermediary, who contacts the club on behalf of an interested party to express a desire to open talks.
At Sunderland, we know those talks generally take place with Stewart Donald and his trusted right-hand man Neil Fox.
Initial conversations are open-ended and act as a good barometer for both sides on whether a deal could be a possibility.
PROOF OF FUNDS
Once initial discussions are held, things start to get a bit more technical.
T h e buy i n g pa r ty w i l l draft a Letter of Intent (LOI) which will contain some very basic information, including at what sum they value the football club, who they are, why they are looking to buy the football club and a brief overview of their plan.
Generally accompanying an LOI is proof of funds from the party interested in purchasing. There is no set value that the party must produce, but they are expected to show that they have the finance to purchase the club and run it.
In most cases, this will need to be provided before talks can advance. That has certainly been the case at
Sunderland, with Rodwell confirming only one party – that which is currently in the period of exclusivity – have shown the club the colour of their money.
It’s at that point that nondisclosure agreements will be signed. This will mean that neither the club nor the interested party will be able to disclose confidential information relating to the deal or the club’s finances.
HEADS OF TERMS
Once the selling group are satisfied that the funds are in place, a heads of terms agreement can be drawn up.
This is a broad document outlining the initially proposed deal – that X amount will be paid for X per cent of the club.
Both parties will agree to this rough deal, before advancing to the next - and arguably most crucial – step. INTO THE DATA ROOM Due d i l i ge n c e – th i s i s when the buying party can really get stuck into things.
Up until this point, the buyers tend to have relied
upon publicly available information in order to decide whether the club they are looking at is a good investO n c e t h at p ro c e s s i s ment opportunity. cleared, the heads of terms
Once this period of due agreement can be revised. diligence begins, the buyers At t h i s p o i nt , a S h a re will have access to the ‘data Purchase Agreement (SPA) room’ and will be able to fois produced which lays out rensically examine the full the full and final terms of state of the club and return to the deal. the hierarchy with any quesThis agreement may go tions they may have. through a number of revi
This can be a long process, sions before a final contract with the buying party natuis agreed between both parrally keen to ensure they exties – which stipulates how amine everything thoroughly much will be paid and for so that there are no nasty surwhat percentage of the club. prises should a deal be comThis document will also pleted. lay out any payment plans
Indeed, in the current ena g re e d , a ny f utu re s u m s vironment, some questions that may be due to the sellover income are even harder ing party and could tidy-up for clubs to answer given it a number of other details at remains unclear when fans the club. will return to stadia and what It’s important to rememgovernment support – if any – ber that in the case of Sunwill be coming to clubs. derland, the deal will have to
As Rodwell told the #SAFbe to the satisfaction of not CUnfiltered podcast: “Matjust Donald, but also minorters are progressing as well ity shareholders Juan Sartori as they possibly can do, but and Charlie Methven before there are questions we as a if the buying party is keen football club simply cannot to purchase the entire allotanswer in regards to COVID.”
REVISIONS AND A FINALISED DEAL
ment of shares in the club.
A P P R O VA L – F R O M THE EFL AND CLOSER TO HOME
Once the Share Purchase Agreement is agreed by all parties, some key approval is needed.
The EFL will, of course, have to confirm that the buying party passes their Owners & Directors' Test and is not subject to any disqualifying condition.
And then closer to home, in the case of Sunderland, there is the involvement of FPP Sunderland, who currently have a charge registered with Donald’s holding company, Madrox Partners.
It’s understood that the FPP trio – comprising Glenn Fuhrman, John Phelan and Robert Platek – essentially have a veto in the sale process and can have a major say in whether a deal will be given the green light.
But receive the thumbs up from all relevant parties, and the deal can finally be signed-off and the shares transferred.