What is the Goal?

By Dennis McCarthy – (213) 222-8260 – dennis@mbsecurities.com – 

Welcome to the M&A Series – M&A for middle market companies considering a sale.

In this video, I’ll address a key early issue in M&A deals, determining the goal of the project.  Is there a singular goal to get the highest price or are there additional goals and considerations?

In a pretty standard scenario, a company owner decides the time is right to sell.

The owner hires a banker.  A company slide deck is created and distributed.  There are calls and meetings.  Bids come in.  The owner selects the highest bid.  But wait.  Is that the only goal?

What about the management team, the employees, the vendors, the customers?

In my experience, it’s better to think about the goals of the deal at the beginning before the bids arrive.

Determining the goals influences many other decisions.  How do you instruct and compensate your banker?  What kind of deal do you want?  Who do you invite to bid on your company and what guidelines do you set?

Think about these elements before you begin.

Now, if a public company is considering a cash sale, the goal is relatively inflexible.  That goal is to get the highest price.

However, a public company considering a stock merger, for example, has much more flexibility in its mix of goals.

A private company typically has more power to set its own goal but depending upon the ownership, it too, may have limitations. 

My point is, a company should think about the deal goals, what’s permitted and what’s desirable, at the beginning of the process, not the end.

In this series, I’ll have additional videos like this, designed to help you to be smarter and to get the best deal, whatever shape that takes.

Please contact me to help your company to complete an M&A transaction or any capital market project.