Private equity, mergers, and acquisition are inter-corporate investment actions that seek to consolidate companies through a takeover or fusion. Such agreement is the combination of two companies to form one with the aid of private equity funds. Private equity firms usually observe various steps to evaluate investment opportunities in companies.
Private equity refers to investment funds generally organized as limited partnerships that buy and restructure companies that are not publicly traded. This usually entails taking a company into private ownership in order to restructure it before selling it again at a hoped-for profit.
Merger is the combination of two companies to form one whilst Acquisition is one company taken over by another.
A private equity, merger and acquisition control in Cameroon is governed by the provisions in the Organization for the Harmonization of Business Law in Africa known by its acronym OHADA on Commercial companies and economic interest groups pertaining to such transactions. The OHADA Law therefore illustrates the requirements and legalities of private equity, mergers and acquisitions in Cameroon.
PRIVATE EQUITY, MERGERS AND ACQUISITION PROCESS IN CAMEROON
Private equity, mergers and acquisition process in Cameroon is illustrated through a series of steps. These steps include but not limited to;
- Organize an Extra-Ordinary general meeting
- Ratification by special meeting of shareholders
- Detailed report by the Board of Directors or Managers of each of the Companies
- Merger valuer appointed by the competent court
- Due diligence on the report
- Merger valuer establishes a conclusive report on the transaction etc.
REQUIREMENTS AND LEGALITIES
Requirements and legalities of private equity, merger and acquisition come into effect on the date of the last general meeting which approved the operation unless the contract provides that the operation shall take effect on another date which shall not be later than the closing date of the last fiscal year of the company or companies transferring their assets.
The requirements and legalities of private equity, merger and acquisition as per the OHADA Law demand that the contract document should be drafted and adopted by the Board of Directors, the Managing Director or the manager as the case may be of each of the parties involved in the operation. The said contract document must contain certain information. This information includes but not limited to;
- The form, name and registered office of all the participating companies
- The reasons and terms of the transaction
- A description and an evaluation of the assets and liabilities to be transferred to the acquiring or new company
- The terms of the transaction like the transfer of shares and stocks and the date from which such shares and stocks give entitlement to profits, as well as any special conditions relating to such entitlement, and the date from which the operations of the acquired or split company shall be considered completed from the accounting standpoint by the companies receiving the contributions.
- The dates on which the accounts of the companies concerned which were used to establish the terms of the operation were adopted etc.