A guest post by Sverre Tyrhaug
Background: Sverre Tyrhaug is the Managing Partner of Thommessen, the largest law firm in Norway. He is one of five individuals from the firm who are currently completing our Certified Legal Project Manager Program®. This is the second of three blog posts based on his answers to essay questions from the program.
A statement of work should include the goal of the project, the client’s expectations in terms of the outcome and the deliverables. It is important that the statement of work establishes a clear understanding with the client on what we are to deliver to meet the client’s expectations, deadlines and milestones and our budget or fee estimate (with relevant assumptions). Since our legal advice is often one of several deliveries in a larger project (requiring input from other advisors and also the client’s internal resources), it is also important that the statement of work is clear on who is doing what on an organizational level.
Below is a sample statement of work for a private M&A project.
We understand that the scope of the Engagement is to assist you with your proposed acquisition of 100% of the Norwegian entity TargetCompany Ltd (the “Target”). The Target is located in Norway, with 50 people in one location being Ostfold County and has annual sales of approximately NOK (Norwegian Krone) 100 million. (Note to US readers: This would be equal to about $13.5 million US$.) The Target has a subsidiary in Sweden (acquired one year ago) with annual external sales of around NOK 50 million. The parties have reached agreement on price of NOK 150 million. The parties are targeting signing the Letter of Intent first week of September with completion of the due diligence and final transaction documents in mid November.
Based on the description of the matter set out above and the further clarifications and assumptions set out below, we are willing to offer a fixed fee on this matter in the amount of NOK 1 million (exclusive of VAT, if applicable).
Our assistance will include the following activities:
- We will assist with reviewing and commenting on the proposed letter of intent for the transaction.
- We will assist on the legal due diligence of the Target.
- This assistance will be limited to the corporate documentation of the Norwegian entity and any other documents and agreements governed by Norwegian law.
- We will provide a legal due diligence report in “red flag” format, describing issues that are deemed as material to the transaction or of relevance to the transaction documents.
- We will prepare the share purchase agreement (“SPA”) and assist in the negotiation of such agreement. We understand that it has been communicated to the sellers that the SPA needs to include extensive representations and warranties, and that this has been accepted in principle as part of the agreement. We also understand that you have reached agreement on price.
- We will assist with the closing of the transaction, being the transfer of the shares in the Target against payment.
The fixed price has been based on the following further assumptions:
- The negotiations will take place in Oslo, and all transaction documents will be reviewed and revised in no more than three “turns” of drafts.
- The final transaction documents will be executed by the end of November.
- The fixed price does not include due diligence beyond two weeks.
- The fixed price does not include tax or VAT due diligence or tax advice with respect to the transactions. We are, however, happy to extend our assistance to also cover tax and duties at your request.
- The Target does not have any material or significant legal or regulatory issues that will require extensive additional due diligence or significant changes to the transaction structure.
- The fixed price does not cover transitional or other post closing agreements, such as revision of employment agreements, redundancy projects, transition/migration of IT services and business date or similar issues.
We generally invoice our clients on a monthly basis. In this matter, under a fixed price, we propose that we split the invoice in three equal payments with invoicing in October, November and December (or at closing if earlier).
The majority of the work will be undertaken by managing associate Mr. Lawyer, with the undersigned as the lawyer responsible for overall supervision and who will also be actively involved in the Engagement. Both core team members have extensive experience within M&A. To the extent we find it necessary, additional lawyers will be assigned to the Engagement.