Friday, April 19, 2019

EFI Goes Shopping

This week’s announcement about the sale of graphics communication trade vendor EFI raised eyebrows across the printing industry landscape. Owners may have noted the fine print referring to a “Go Shop” provision, thinking, “I could never sell my business that way.” Privately-owned companies typically traffic through an “undisclosed” stealth M&A sale process, managed by experts such as my partners at Graphic Arts Advisors, LLC.

The primary exception requiring infrequent application of an announced M&A sale process for privately-owned companies stems from bankruptcy cases. The “stalking horse” provisions in bankruptcy stand as the distressed M&A sister to “Go Shop” provision used in the context of public companies such as EFI. From my vantage point as an M&A Advisor, I caution owners to not avoid the obvious buyers out of concern for secrecy. The visible need for a succession plan offers legitimacy for carefully managed exploratory talks that fall short of full-blown “disclosed” sale process.

For more on bankruptcy and M&A transactions in the printing industry, check out the latest edition of The Target Report.

Monday, April 1, 2019

Hard Shut Downs - Not So "WOW" for Stakeholders

WOW Air's immediate shutdown on March 28th illustrates the pain inflicted on customers with an "abrupt ending" of business operations rather than "gradual winding down of assets and liabilities.” The company's extreme financial distress underscored the need for creative options to avoid the checkmate scenario when new financing failed to materialize. The WOW Air case involving “forced liquidation” is a stark reminder for business owners in troubled situations that “orderly liquidation” tends to achieve fairer outcomes for all stakeholders including the bank, customers, employees, and trade creditors.