Structuring the Transaction

A value indication is not a binding offer.  Terms and structuring often matter more than the headline price.  Applying competitive pressure as negotiating leverage and eventually structuring a share or asset transaction is complex and fraught with pitfalls.  Your Valitas team has seen this many times before and can collaborate effectively with your legal counsel and other external advisors to navigate the path to close.

Evaluating an Offer

In addition to the headline price, the most common evaluation factors include:

  • Business Continuity: Plans for the business, employees, key management, family, other stakeholders.
  • Form of consideration: cash, shares, vendor take back or a combination?  Are there restrictions on trading share consideration?  Possible contingent consideration – typically called earn-out.
  • Transaction Terms: Asset vs. share acquisition, seller representations and warranties and conditions to closing, such as due diligence, financing, regulatory approval.
  • Acquirer Considerations: Availability of funds, acquisition history, timing to close, are they distracted by other acquisitions and corporate activities?

Managing the Due Diligence Grind

Any potential acquirer will need to conduct a due diligence investigation before they can enter into a definitive agreement to buy your business. Initial indications can be tactically inflated to ensure the acquirer gains access to your confidential information and then systematically reduced, citing negative findings during due diligence. 

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