Following the Supporters’ Trust providing the football club with an Acceptance Notice in respect of Glen Henderson’s shares on 5th January 2023, the Trust Board wishes to provide some clarity on the process potential investors will go through up to and including a Special General Meeting for members to vote on the issue.
In our statement dated 5th January 2023 we informed members that we have had six interested parties, to date all have completed NDAs and have progressed through to Stage 3. Each stage of the process will be handled by Trust Board members, Trust members with relevant expertise, or the Supporters Trust solicitors.
Stage 1 – Informal discussions
Initial informal and confidential discussions on the fundamentals of the investment opportunity will be had with any serious enquirers. This will be the case whether the interested party is a current City fan or an external party. As those with the detailed knowledge of the club’s operation, finances and legal aspects, the Trust’s club board members (Alastair Smith and Mike Brown) will lead those initial discussions with some guidance from the Trust’s solicitors.
Stage 2 – Non-disclosure agreements / Information sharing
Prospective investors who wish to pursue an interest following the informal discussions must first sign a standard non-disclosure agreement (NDA). Following receipt of the signed NDA, relevant information on the club’s finances, contractual obligations, budget forecasts, constitutional documents etc, will be shared with the interested party and their professional advisers. All parties are required keep their bids confidential until final bids are submitted to Trust members to ensure a fair bidding process for all.
Stage 3 – Due diligence / Background checks
Investors will wish to review the information provided and complete their own due diligence process. Similarly, the Trust with the aid of their solicitors will complete necessary background checks on the individual(s) involved in the bid, including ID checks, a review of their business interests, availability of unencumbered assets, source of funds, Companies House records and so on.
Stage 4 – Investor Proposals
In preparation for presenting to the Trust membership, each investor will be asked to prepare a document describing their proposal outlining their background, investment commitment, vision for the club and how they would work with the Trust. The format for this will include a set of questions to lay out the fundamentals of each bid in plain terms.
Stage 5 – Proposal Review
The Trust will form an investment sub-committee to review investor proposals. The sub-committee is expected to comprise of Trust directors Jim Calverley & Seth Sowerby, the Trust’s solicitors, and an additional external supporter with sports finance and accountancy expertise. This sub-committee will have two main responsibilities: 1) they will lead the review of investor proposals & 2) they will conduct interviews with each investor in face-to-face or online meetings.
Investment proposals will be reviewed and scored against a predetermined set of objective criteria. Additionally review of the proposals allows all board members to table questions for the interview process. The investment sub-committee will interview each investor to probe their formal proposals, assessing their overall character and how good a fit for the club and partnership with the Trust they are. Sub-Committee members will independently score each prospective investor on a pre-agreed set of criteria.
The sub-committee will then make recommendations to the Trust board regarding each bid based on their scores and the general consensus of their suitability. Depending on the number of prospective investors who have submitted proposals they will nominate a short-list for member consideration. The full Trust board will assess these recommendations alongside their review of proposal documents before agreeing on the proposals to put to Trust Members. Once the shortlist of prospective investors is determined, details of the various bids will be shared with the National League to ensure full transparency and to allow them to carry out their own scrutiny review.
Stage 6 – Trust Special General Meeting
The Trust has committed to its members having the final say on ownership of the football club, ensuring that members have the information they need to make an informed decision, and can have confidence in the due diligence performed in their interest. The exact details of the SGM will be communicated in a future update, but it is anticipated that members will receive a presentation from each prospective investor, including the opportunity for Q&A before voting on their preferred candidate. The date of the SGM is yet to be determined and is subject to a minimum of fourteen days notice, but is likely to occur in March.
Stage 7 – Completion
Following the SGM the Trust will work with the selected investment party to complete the transaction and associated contracts in a timely manner. This part of the process will be subject to regulatory approvals, such as the Football Association’s ‘fit and proper person test’. However, the due diligence stage of this process should minimise the risk of any unforeseen issues raising their head. In the unlikely event of the preferred bid falling through then proceedings will switch to the second placed bidder.