Coaching assembly m&a process

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Process - Potential exit routes M&A PROCESS NEGOTIATED SALE

TARGETED AUCTION

OPEN AUCTION

Approach 1 or 2 buyers with a view to giving exclusivity

Approach a limited number of buyers on a confidential basis

Announce the disposal to elicit expressions of interest

IPO Public listing of the company and sale of shares to broad investor group

p

[Limits disruption to the business and employees]

p

[Creates competitive tension

p

[Maximises potential to identify all bidders]

p

[Valuation upside potential through phased exit]

p

[Provides flexibility in timing and buyer selection] [Confidentiality and limited effects of a failed process]

p

Provides flexibility in timing and buyer selection: seller drives process]

p

[Creates maximum competition]

p

[No reps and warranties, only prospectus liability]

p

[Most likely to generate the highest price]

p

p

[May attract financial investors]

[Better access to financial markets] [Increased publicity can be beneficial to operations]

q

[Most likely to result in disruption to the business and employees] [Some buyers may decline to participate in a broad, public auction]

p

p

[Higher likelihood of achieving high valuation]

p

[Fast process] [Confidentiality and limited effects of a failed process]

p

q

[Certain buyers may not be identified]

q

[Competitive tension could be limited]

q

q

q

[Increased risk of failure] q

[Can become time consuming if multiple negotiations occur] [Increased possibility of leaks] [May fail to identify certain buyers]

q

q

[Confidential information is disseminated to a wide audience]

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p

q  q

[Only phased exit possible] [No control premium, discount to comparable trading universe might be required]

q

[Exposure to market and share price risk]

q

[Publication and reporting requirements]

q

[Listing-related expenses]

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Process - Potential exit alternatives M&A PROCESS TRADE SALE

BUYOUT

IPO

SPIN-OFF

Sale to a strategic buyer

Sale to a financial buyer

Public listing of the company and sale of shares to broad investor group

Create a new company from an existing division through a divestiture

[Full exit] [Control premium]

p

p

[Valuation upside from synergies]

p

p  p

p

q  q  q  q

MARKET-BASED SOLUTIONS

[Full exit] [Control premium]

p

[Valuation upside potential through phased exit]

p

[Optional staple financing to provide valuation floor]

p

[No reps and warranties, only prospectus liability]

[Structuring flexibility ranging from negotiated sale to full auction process] [Potentially limited disruptions to the business and short process]

p

[Higher leverage can allow for higher valuations in good financing environment] [No anti-trust issues]

p

[Better access to financial markets]

p

[Comply with regulatory rules]

p

[Increased publicity can be beneficial to operations]

p

[Allows exit from a whole division]

[Opening of books to direct competitors provides risk]

q

[Disruptions to the business as wide auction necessary]

q

q

[Reps and warranties] [Potentially anti-trust issues]

[Market conditions] [Flow-back issues]

q

[Only phased exit possible] [No control premium, discount to comparable trading universe might be required] [Exposure to market and share price risk] [Publication and reporting requirements] [Listing-related expenses]

[Risk of cherry-picking / orphan assets]

p

p

q  q

q

[Reps and warranties] [Confidentiality of process difficult to maintain] [Political and public perception can be problematic] [Typically higher return requirements by buyers]

CoachingAssembly. All rights reserved. Any unauthorised copying, duplication, reproduction, re-selling, distribution or other commercial use will constitute an infringement of copyright

q

q  q  q

p

p

q  q  q  q  q

[Create shareholder value while taking advantage of tax laws] [Focus on core business]

[Ownership changes rapidly] [Structural selling effects (from asset managers)] [Partial information and little analysts’ coverage] [Conflicts of interest]

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Sell-side process considerations Main documentation DOCUMENT

RESPONSIBILITY

DOCUMENT

RESPONSIBILITY

Process letters

Investment Bank / Legal advisor

Data Room

Investment Bank / Legal advisor / company

Teaser / Info Memo

Investment Bank

Manage-ment pres.

Investment Bank / company

Vendor Due Diligence (VDD)

Auditors / other advisors

Share Purchase Agreement (SPA)

Legal advisor / Investment Bank

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