Presenting a live 90-minute webinar with interactive Q&A M&A Auctions: Successful Bidding Strategies Planning and Executing Winning Bids, Minimizing Costs of Losing Bids THURSDAY, JANUARY 8, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Robert C. Hussle, Partner, Rogers & Hardin , Atlanta Christopher J. Voss, Partner, Stoel Rives , Seattle The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
Tips for Optimal Quality FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-888-450-9970 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
Continuing Education Credits FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: In the chat box, type (1) your company name and (2) the number of • attendees at your location Click the SEND button beside the box • If you have purchased Strafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form). You may obtain your CLE form by going to the program page and selecting the appropriate form in the PROGRAM MATERIALS box at the top right corner. If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.
Program Materials FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: Click on the ^ symbol next to “Conference Materials” in the middle of the left - • hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. •
Successful Bidding Strategies for Bidders in M&A Auctions 5 Aiming For Victory & Protected In Defeat Presented By: Robert C. Hussle and C.J. Voss
Pros and Cons from Seller’s Perspective 6 Key Advantages • Reach more potential buyers • Competitive process should maximize price and result in more favorable deal terms • More control over process, timing, and transaction documents • Market check for directors Key Disadvantages • Higher cost • Multiple bidder auction generally more disruptive to business operations than negotiated transaction • More difficult to maintain confidentiality of process to employees • Competitive risk from bidders who are not serious • Adverse “market” perceptions if process is unsuccessful
M&A Auction Process Seller’s Perspective 7 • Hire an investment banker • Banker contacts potential buyers • Confidentiality agreements with potential bidders • Seller and banker prepare Confidential Information Memorandum • Perform internal due diligence and create virtual data room • Management presentations • Seller distributes bid package – CIM , form purchase agreement and bid instructions • Buyers submit “bids” • Seller analyzes bids and ranks them • Seller commences negotiations with short-listed bidders • Seller ultimately enters into definitive agreement with single bidder
Typical Bid Instructions 8 • Mark up purchase agreement rather than sending an issues list • Significant changes are unwelcome • Submit your “binding” offer • Identify any impediments to closing • Reply by a set date and time
Seller’s Goals in Auction 9 • Create real or apparent competitive market for unique/ scarce asset • Obtain highest purchase price • Secure favorable deal terms with limited post-closing indemnity or other obligations • Provide certainty of closing
Seller Ranks Bids 10 • Price • Timing • Indemnity terms • Other key factors/conditions and “structure” risk • Reputation/integrity of bidder
Seller Ranks Bids - Example 11
Bidder’s Objectives 12 • Confirm pricing/valuation • Build credibility with seller and its advisors • Identify synergies • Identify risks and obstacles • Ultimately, win the bid • Minimize the cost of bidding (particularly if losing) – financial and management time and attention
Successful Bidder Strategies 13 • Play by the rules • Due diligence • Focus on real issues • Be a serious bidder • Money talks • Bid in the alternative • Provide certainty • Assess and use shifting deal leverage
Play by the Rules 14 Conform bid to bid instructions to the greatest extent possible Mark up the purchase agreement, but don’t over do it – “market terms for market price”
Due Diligence 15 Undertake a serious due diligence effort Devote sufficient resources to review the documents posted in the virtual data room to: identify genuine business issues validate your valuation understand working capital requirements identify synergies demonstrate seriousness of bidder
Focus on Real Issues 16 Address real (rather than theoretical) issues in mark- up of purchase agreement For example, if the diligence reveals an asbestos- related environmental issue in one of the seller’s plants, tailor the mark-up to address that issue and not all manner of environmental concerns Avoid seeing ghosts
Be a Serious Bidder 17 Don’t bid if you aren’t serious – a low-ball bid rarely succeeds in winning the bid for a valuable asset Demonstrate your interest by your actions – assemble deal team, attend management presentation and make site visits, spend time in the virtual data room, engage with the bankers and provide a thorough mark-up of the purchase agreement Know your reputation as a buyer: Do you get deals done? Do you “re - trade” deals? Are you litigious?
Money Talks 18 The highest bid almost always wins the bid Understand the process: bidders will be asked to bid more until they say “no” Consider bidding in a range to get to the next round but save some powder for the last push by the seller
Bid in the Alternative 19 If you don’t like the seller’s proposed sale terms, give the seller an alternative For example, if the seller insists on a 12-month survival period, then formulate your bid based on that survival but also bid on the basis of an extended survival period
Provide Certainty 20 Sellers want to know the deal they sign will close and they won’t have to return the purchase price through indemnity Don’t add third -party conditions – address through covenants if workable Be creative on indemnity – can rep and warranty insurance bridge any gap in coverage?
Assess and Use Shifting Deal Leverage 21 As bidders drop out of later rounds, the leverage of the remaining bidders begins to increase and the continued bidding confers a benefit on the seller Sellers and their bankers will work hard to maintain the dynamics of a competitive market If appropriate, a bidder in “second” place may seek an expense reimbursement from the seller for staying in the auction
Successful Bidding Strategies for Bidders in M&A Auctions 22 Bob Hussle: Rhussle@rh-law.com 404.420.4633 C.J. Voss: cj.voss@stoel.com 206.386.7505
Recommend
More recommend
