Starting Right: M&A Preliminary Due Diligence

Starting Right: M&A Preliminary Due Diligence  When making an acquisition, it’s important to perform preliminary due diligence as a buyer before making an offer or submitting an LOI. To start: Request financial statements, including corporate tax returns, for at least 3-5 years. Observe trends in cash flow, profit, expenses, and debt load, for example. Does the…

M&A Update: Rise of “Social Due Diligence” and the “Weinstein Clause”

In the midst of a flury of M&A activity, Bloomberg is reporting that buyers are requesting additional language in the representation and warranty provisions of company purchases to protect from the headline risk and drop in value of companies associated with sexual misconduct allegations. This provision is being termed the “Weinstein Clause.” How should you…

Negotiating the Sale of Your Company: Earn-out Examples

As mentioned previously regarding earn-outs, these are common provisions that you will see from the buyer as a seller of your company as a way to compromise on the valuation. Let’s take a look at some examples: In 2014, Alcoa purchased aerospace jet engine component maker Firth Rixson for $2.85 Billion. This included $2.35 billion…

Negotiating the Sale of Your Company: Earn-outs When Staying on as an Employee

In the previous post regarding earn-outs, we went over examples of earn-out scenarios. In some instances, the buyer is not only acquiring the company, but the people to help operate the larger enterprise. Sellers may be asked to take key rolls within the buyer’s company post-sale. Let’s look at an example. In 2016, Sotheby’s acquired…

Negotiating the Sale of Your Company: Earn-outs When Executives Become Employees

Last post, we looked at an earn-out example from Sotheby’s in which the entire earn-out will be paid. Here we will look at another example, this time from Disney’s acquisition of Maker Studios in 2014, where key executives stayed on with Disney. Here we look to Disney’s 10K from 2015. On May 7, 2014, the…

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