The first formal, yet not entirely legally binding, step in many business transactions is to sign a “letter of intent.” This is particularly so in the case of buying or selling a company and in other M&A transactions. Reading and Writing a Letter of Intent by Peter Feinberg is an insightful read for those beginning this process.
If you are thinking about selling your company or transitioning it to a new owner in a way that doesn’t involve a straight sale, you should read H. Barry Goodman’s article Planning and Staging a Company for Transition. It will help guide you in the right direction to make the right decisions.
From the series: VALUATION IN CORPORATE TRANSACTIONS 2019
Complimentary for all Financial Poise Weekly Subscribers. Valuation experts are commonly used by buyers and sellers to determine the price they are willing to pay or receive to transact a sale of a security, a business, or a discrete asset. Valuations commonly must be done in corporate spin-offs, shareholder buyouts, bulk assets sales, and a host of other contexts in which assets must be sold or valued without the benefit of being tested by the market.
Firms struggle when their declining cash flows (and expected returns) reduce liquidity and prevent them from amortizing their long-term debt according to the schedule negotiated with the financing source. The original long-term financing (real estate mortgage or corporate bonds) for a new plant may need to be restructured because of the company’s overall falling financial performance. If the company can convince itself that future interest rates will be low for debt carrying shorter-term maturities (such as lines of credit, asset-based facilities, or revolving facilities), then the company may choose to refinance longer-term debts with shorter-term, lower-interest-rate financing. Read more in this article by David Bagley.
If you do distressed middle-market M&A, buy overstock, surplus, or distressed assets, or if you otherwise look for companies that otherwise need to do a transaction urgently, how do you find your deal flow? There are plenty of services that mine SEC data, and there are plenty of others that aggregate bankruptcy data. But only DailyDAC’s DISTRESSED DEAL DATA™ curates hard-to-find, time-consuming information about companies in the vast middle market that are stressed and distressed. From plant closings to mass layoffs; from going concern opinions to the filing of chapter 11 cases where there will likely be a sale; from receiverships, assignments for the benefit of creditors, and more. DISTRESSED DEAL DATA™ is priced right and limited in the number of subscribers it permits. Subscribe here. Learn more here.
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