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How can I best redesign the M&A framework when the client is the seller ?

Framework M&A MECE Private Equity

Hi,

In traditional M&A cases (client is the acquirer) I usually split my analysis as below:

Financial

1 Benefits (A)Target Value Company (B) Synergies

2 Costs (A) Price paid, cost of financing (B) Integration costs

Non-Financial

1 Cultural and organizational fit

2 Regulatory fit

When the client is the seller, does the analysis determined by the choice of the owners to withdraw? For instance, if the owners leave the company, Should I only focus on the benefits (Value + Synergies) and regulatory fit as the rest is the concern of the acquirer? If the owners stay involved, Should I keep everything as all branches of the framework will be a topic of negotiation between the seller and the acquirer?

Thanks

Hi,

In traditional M&A cases (client is the acquirer) I usually split my analysis as below:

Financial

1 Benefits (A)Target Value Company (B) Synergies

2 Costs (A) Price paid, cost of financing (B) Integration costs

Non-Financial

1 Cultural and organizational fit

2 Regulatory fit

When the client is the seller, does the analysis determined by the choice of the owners to withdraw? For instance, if the owners leave the company, Should I only focus on the benefits (Value + Synergies) and regulatory fit as the rest is the concern of the acquirer? If the owners stay involved, Should I keep everything as all branches of the framework will be a topic of negotiation between the seller and the acquirer?

Thanks

 Recent activity on Nov 26, 2018
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Hi Anonymous,

as always, the central rule is that you need to understand the OBJECTIVES of the client first! If the client is the seller, he might be heavily interested in the future of the company (in this case you need to include the elements you outlined), or at the other extreme he might be only interested in maximizing the monetary value he can appropriate (in this case these "soft" factors only play a side role in terms of risk factors that could endanger the deal if the buy side is seeing an issue there).

But the central notion is that without clarifying the objective of the client, it is simply impossible to come up with a rigorous structure/decision logic.

Cheers, Sidi

Hi Anonymous,

as always, the central rule is that you need to understand the OBJECTIVES of the client first! If the client is the seller, he might be heavily interested in the future of the company (in this case you need to include the elements you outlined), or at the other extreme he might be only interested in maximizing the monetary value he can appropriate (in this case these "soft" factors only play a side role in terms of risk factors that could endanger the deal if the buy side is seeing an issue there).

But the central notion is that without clarifying the objective of the client, it is simply impossible to come up with a rigorous structure/decision logic.

Cheers, Sidi

(edited)

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