All too often, we hear the same sad story: a CEO gets made an offer for acquisition, doesn’t think that he/she needs a banker or advisor for the deal, and then somewhere down the line… the deal falls apart. So how do you decide what path to take for you and your business? We’ve compiled a list of 3 key signs that you need a banker for M&A:
- There may be other buyers willing to compete for the deal. Competition is the best way to drive a fair deal for both sides. Buyers tend to put you in a bear hug and then move slowly, knowing that your leverage decreases every day as cash drops and your options narrow. The price tends to go down, not up. Your best defense is to have other options at the ready, including M&A and funding.
- You don't have someone on your team with deep M&A experience. There are many traps and pitfalls that will destroy value and potentially break the deal that can be avoided with an experienced advisor.
- You have outside shareholders. You have a fiduciary duty to your shareholders to deliver the best possible deal under the circumstances. This fiduciary duty is diametrically opposed to the agenda of the buyer, who will want to deliver as little value as possible to the cap table, and channel most or all of the consideration into retention