GAME WILL PLAY OUT OVER TIME
THERE is still a little way to go yet before Huddersfield Town formally passes into new hands following the announcement that a so-far anonymous North American group have agreed to take over the club.
The club are now into the final stages of the process, but if other takeovers elsewhere are any guide, we can probably expect a couple more months to go by before everything is ratified. So how have they got here and what’s behind the further delays?
Naturally the first step is to open the bidding process, which Huddersfield Town did back in October when they announced the club would be up for sale.
Even in a best case scenario, where a single bidder has already been identified, there can be several weeks’ worth of a ‘discovery’ process, whereby the interested party will be given access to the club’s finances and do their due diligence to make sure there are no nasty surprises awaiting them once they take over.
In Town’s case, it appears there were in fact several different parties involved, with managing director Dave Baldwin tasked with working out which of them had offered the best bid for the club.
That should have taken into account not just the amount they were offering as a purchase price, but the plans the new custodians had should they get control of the club. Only serious and interesting bids will have reached this stage – there may have been others that were dismissed earlier.
There will have been a discovery process for the club to do on potential investors, too. First and foremost, they will likely have pre-empted the EFL in asking for proof of funds to execute the takeover and a business plan for at least the next three years, knowing that a takeover could only go through if that was signed off by the relevant authorities.
Throughout all of this, everyone involved will have been under strict nondisclosure agreements (NDAs) that prevented them from talking about the bid or even revealing the various bidders’ identities.
This is standard practice in business both for competitive reasons and to avoid potential embarrassment should a bid fail; at the very least, it buys them some plausible deniability. NDAs are legally enforceable, and anyone who breaks them runs the risk of being sued, effectively forcing everyone involved into silence. This is often frustrating for fans of the club who want to know what is going on, especially as it prevents anybody from going on record with the media.
Town’s sale was also complicated by there having been a separate takeover to work on, with Hoyle long in the process of buying back Phil Hodgkinson’s 75% share of the club. The club announced that as having been completed as part of their statement on Thursday morning.
After selecting their preferred bidder for the subsequent sale, both Hoyle and the new investors would each need to sign papers agreeing to the transfer of the club’s shares. That sounds deceptively simple, but coming to agreement on this kind of document can be extremely involved and time-consuming, potentially running into dozens or hundreds of pages of clauses and conditions.
Those papers have now been completed and exchanged, however, which is why the club were finally able to make an announcement after five months of silence about the takeover process.
It is unusual for the bidding party not to have been named at this juncture, and the reason Town’s prospective new owners have opted to do so is currently unclear.
The EFL will likely have been notified of the takeover at this stage – and probably earlier in the takeover, just to make sure that everything looks to be in order before a formal submission is made.
Once it is lodged, the new investors will need to go through the Owners and Directors Test.
These background checks make sure the new owners do not have conflicting interests in other clubs; that they’ve not been disqualified from being a company director; that they haven’t been jailed for a dishonest crime; that they haven’t been declared bankrupt or involved in prior insolvency of a football club; that they have not been banned by a sporting body or breached betting regulations; and that they have not been named on the sex offenders’ register.
The EFL will also ask for proof of funds and a business plan, both of which will be used to determine that the new owners have the means and intention of funding the club for at least the next three years.
The Financial Conduct Authority (FCA) will meanwhile need to give their assent after running checks on the new owners’ ability to provide credit.
How long that is all likely to take from here is unknown, but to cite an example we’ve used before, Coventry City’s recent takeover by Doug King took just under two months between its announcement by the club and it being formally signed off. Other deals have taken longer.
It is unlikely Town and the new buyers would have made their submission and made an announcement without being confident all those checks will be passed, as it would cause significant embarrassment if the deal were to fall apart now on that basis.
As long as everything is in good order, though, things are largely out of their hands now – though it is possible the relevant authorities will involve them again by asking for clarifications or revisions to be made, which may extend the process.