Friday, January 25, 2019

Aligning Price & Structure

The sale of Aldine Printing to GSB Digital (announced December 2018) exemplifies what my printing industry clients like to call “strategic fit,” the foundational basis for the M&A transaction. Aldine saw a path forward to achieve succession and graceful transition from family ownership. GSB Digital saw a growth opportunity from customer relationships and new capabilities. Mutual interest grounded in the “strategic fit” paved the way for creative deal-making where traditional M&A wouldn’t have worked. The case is a reminder for printing and graphics communications companies to seek expert advice on putting the M&A deal together IF and WHEN there is “strategic fit” and no easy answers on valuing synergies, allocating risk of future performance, or resolving financial impediments.

Friday, January 18, 2019

Earn-outs in Distressed M&A

As industry-specific M&A Advisors, my partners (Mark Hahn, Mitch Evans) and I carefully align “price” and “transaction structure” to achieve optimal financial outcomes, regardless of the condition of seller’s balance sheet. That’s why I am proud of what was in today’s mail: earn-out checks received from buyers in 3 separate M&A transactions which represent seller's value for customer relationships that continue to bear fruit more than a year after Closing. While some of these funds still pay old debts out of the orderly wind-down plan under my care, most cases were resolved amicably among creditors within the first year post-Closing. This means that owners may be able to legally and ethically take some money home from the payments. They serve to validate what was a tough decision back when it was made: to trust the buyer and to enter into an unconventional M&A transaction where a traditional sale of business could not have succeeded. It’s nice to see these checks today, giving me pause to reflect on events from the previous few years. I know the clients will be happy to enjoy the moment as well.

Friday, January 11, 2019

Undisclosed and Unknown

Here is an Alert on Successor Liability to My Clients and Professional Contacts: M&A was not a factor in the recent Fox Bindery financial disaster brought on by the Dept of Labor (Cautionary Tale: Fox Group is Defrauded by Temp Agency) but the case illustrates what you’ve heard me call “undisclosed, unknown” Seller liabilities. In theory, the staffing agency mess which rolled into Fox Bindery could have become Buyer’s problem EVEN IF Buyer followed standard legal advice to avoid buying seller’s stock and performed ordinary due diligence. It’s a cautionary reminder for Buyers to identify Successor Liability risks as early as possible and navigate protectionary measures into your M&A Offer even prior to formal legal documentation and accountant’s due diligence. I am closing this Alert by stating that the Fox Bindery case is used here solely for educational purposes, and my comments should not infer anything negative about this company.