Real World M&A Strategy Question

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JoeChick10
Posts: 75
Joined: Thu Mar 22, 2018 10:33 pm

Real World M&A Strategy Question

Post by JoeChick10 »

I have very little experience with the M&A process and my company has been through a series of events in the last few weeks that I'm hoping someone can shed some light on:
  • We are a small publicly-traded company in a fast evolving industry trying to grow rapidly. We have bought 2 smaller companies in the last 12-18 months.
  • We received an unsolicited acquisition offer that our board rejected last week
  • Today we find out that our board retained a financial advisor to review company strategy and propose opportunities to enhance our value/market position.
The rhetoric from the company is that retaining this type of advisership is routine among public companies every 3-5 years - particularly when you receive an unsolicited acquisition offer. One press outlet reported that we were 'up for sale'.

While I don't necessarily think us selling would be a bad thing, I'd like to have a better understanding of what's actually going on - if possible. Any information would be greatly appreciated!
inverter
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Location: New York, NY

Re: Real World M&A Strategy Question

Post by inverter »

This likely means your computer is up for sale either to larger companies or private equity. Everything else is going to be highly context driven, i.e. why would a company buy yours, what value would they find from it, what types of employees would they retain, etc.
Topic Author
JoeChick10
Posts: 75
Joined: Thu Mar 22, 2018 10:33 pm

Re: Real World M&A Strategy Question

Post by JoeChick10 »

inverter wrote: Mon Mar 08, 2021 12:22 pm This likely means your computer is up for sale either to larger companies or private equity. Everything else is going to be highly context driven, i.e. why would a company buy yours, what value would they find from it, what types of employees would they retain, etc.
Thanks. Makes sense. Question, what would be the point/advantage of hiring this finance/advisory firm? Would they act as an intermediary/broker ('realtor') between us and other companies who might be interested?
magicrat
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Re: Real World M&A Strategy Question

Post by magicrat »

A public company is always for sale. If a good enough offer comes in, the Board is obligated to accept it. The Board also has an obligation to understand the best path for value creation, and to maintain its own view of valuation.
Topic Author
JoeChick10
Posts: 75
Joined: Thu Mar 22, 2018 10:33 pm

Re: Real World M&A Strategy Question

Post by JoeChick10 »

magicrat wrote: Mon Mar 08, 2021 12:51 pm A public company is always for sale. If a good enough offer comes in, the Board is obligated to accept it. The Board also has an obligation to understand the best path for value creation, and to maintain its own view of valuation.
Thanks. Makes sense. Same question as above if you don't mind - what would be the point/advantage of hiring this finance/advisory firm? Would they act as an intermediary/broker ('realtor') between us and other companies who might be interested?
magicrat
Posts: 1191
Joined: Sat Nov 29, 2014 6:04 pm

Re: Real World M&A Strategy Question

Post by magicrat »

They are most likely an investment bank. They will do all of the valuation work, provide credibility, and yes they will broker a transaction if that is the chosen path.
inverter
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Re: Real World M&A Strategy Question

Post by inverter »

JoeChick10 wrote: Mon Mar 08, 2021 12:49 pm
inverter wrote: Mon Mar 08, 2021 12:22 pm This likely means your computer is up for sale either to larger companies or private equity. Everything else is going to be highly context driven, i.e. why would a company buy yours, what value would they find from it, what types of employees would they retain, etc.
Thanks. Makes sense. Question, what would be the point/advantage of hiring this finance/advisory firm? Would they act as an intermediary/broker ('realtor') between us and other companies who might be interested?
An acquiring company rarely wants to deal directly with the Board/owners of a company they are acquiring. There is a huge amount of due diligence, etc. that both parties perform and that's been done with the advice of an investment bank.
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