A change at the top looks on the cards for Everton.
As the Toffees head into the weekend knowing that three points on the final day from their home encounter with Bournemouth will likely guarantee the club’s survival in the Premier League, barring Leicester picking up six points from their last two games, and maintain the top flight presence they have held continuously since 1954, another saga is set to unfold away from the pitch.
Club owner Farhad Moshiri has been looking for investment into Everton for some months in a bid to recapitalise the business, find the final tranche of funding for the stadium and reduce some of the burden of financial risk that he currently shoulders through his 94 per cent majority shareholding.
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New York-based investment firm MSP Sports Capital have been linked with taking a partial stake in the Toffees since January, when co-founders Jahm Najafi and Jeff Moorad, along with company vice president Peter Taylor, visited Merseyside to watch Everton lose at home to Southampton, also paying a visit to the 52,888-seater stadium that is being constructed on the banks of the River Mersey.
Another American investment fund, 777 Partners, have also been strongly linked with a full takeover bid in recent days, with the Miami-based firm having held discussions with Moshiri and his representatives in recent months, initially with a view to a minority stake.
On Monday afternoon, Sky Sports claimed that Everton had entered into an exclusivity agreement with MSP Sports Capital, effectively giving the US firm time to conduct due diligence and proceed with talks over a sale without fear of having a deal hijacked, with Moshiri and the club unable to negotiate with any other party during the agreed period.
An exclusivity agreement usually lasts for a period of between 30 and 60 days, most often the former, with Moshiri having previously entered into one last year with the Peter Kenyon/Maciek Kaminski consortium that had sought a full takeover of the club before a deal broke down.
Sky Sports claim that any deal would be for investment into the club, not for a full takeover. Such a move would speed up a process that Everton will want to have concluded in a timely fashion, but one that would be materially impacted by what happens on Sunday afternoon, with relegation to the Championship drastically altering the revenue generating ability of the club.
Exclusivity agreements are commonplace in mergers and acquisitions. Not only does it provide buyers with the time to conduct full due diligence without pressure from rival bidders, it is necessary for drafting the purchase documents or debt financing documents. It is important to note that two parties entering into such an agreement does not bind the would-be buyer to complete a purchase.
For Everton, if it is to be a minority investment, as had been laid out by Moshiri as his intended course when he spoke to the Fan Advisory Board back in January, it would be something that could be concluded in a more timely manner than that of a full purchase.
Speaking to the ECHO earlier this year, football lawyer and author, Daniel Geey, who has been involved in a host of high-profile club takeovers in his career, explained the process.
Geey said: "The speed of any sale would depend on what the strategy would be, what type of sale is it? A 10 per cent minority shareholding sale is a different beast to full sale. When you take a minority stake you will do due diligence over all assets and costs, although you aren't likely to have a real say. It is a speedier process.
"If you are buying a club, spending whatever valuation is placed upon it, because you are buying club at high value you will want to know far more detail about the nuances of what is going on and more extensive due diligence will be conducted into every facet of the club and there will be a significantly negotiated legal document that accompanies the sale."
For Moshiri, while a full takeover had been appearing more likely in recent days, the latest development suggests that he will be retaining overall control over the club, although it would be a move that would almost certainly come with boardroom changes and would likely plot a path to an eventual exit for Moshiri further down the road where he wouldn’t be leaving so much money on the table having been into Everton for a reported £700m so far.
MSP are a company that seeks elements of operational control from their investments, with at least a couple of seats on the board likely for the company so that they can exert some influence and bring their expertise to the table to help scale the business and see an eventual return on the capital that they will be investing.
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