 |
Unique Backing on an M&A Project
Are you currently considering an acquisition? This recent case may be of interest to you.
As is often the case, a vendor in an M&A transaction was put in the difficult position of insisting that no representations and warranties would be provided, and the purchaser would not be given any conditions on financing. This is usually an impasse as few buyers or their financiers can move forward without vendor representations and warranties.
In this case, we, at Link Resource Partners, felt comfortable with the risk. We were confident in the business as the company had sound operations, provided reliable reports, and the market value of their fixed assets exceeded the book value. It was not a trivial transaction for a group of our size ($20 million); however, we were confident that the risk could be managed and subsequently involved our fund, BCC.
The solution involved Link Resource Partners managing the risk by using BCC funds to close the deal without the representations and warranties, while simultaneously arranging the necessary leverage to allow the purchaser to close. BCC is our exclusive fund. Having our own fund to bridge the deal made it possible to complete the transaction - something most intermediaries would not be able to do.
Fronting money for a bid, either public or private, is a unique solution that we can provide.
Fronting money for a bid, either public or private, is a unique solution that we can provide.
In addition to strengthening the buyer’s position, our solution included takeout financing thus removing from the buyer an additional element of risk
In an M&A project, a buyer typically prefers to use debt financing to minimize dilution. The contingency this creates, in the midst of negotiating the purchase and sale,
weakens the buyer’s negotiating position. The same holds true in bidding for public companies. The use of our fund permits committed cash bids, which is clearly a stronger
position than a cash and shares bid.
In addition to strengthening the buyer’s position, our solution included takeout financing, thus, removing an additional element of risk for the buyer.
If you are considering an acquisition, consider outsourcing the financial risk. Our involvement dramatically increases the odds of successfully closing an acquisition deal.
<< |
|
|
