investment bank logoinvestment bank logoinvestment bank logoinvestment bank logo
  • ADVISORY
    • BUY SIDE M&A
    • SELL SIDE M&A
    • CAPITAL RAISE
    • BUSINESS VALUATIONS
  • DEALS
  • ABOUT
  • CONTACT

Deal Terms: Matching to the Owners’ Needs

There is a myriad of ways to structure a deal when the owners are looking to sell out the stocks or their company in the pursuit of an exit strategy. Each different strategy require that the owners’ needs and wants are met in a way that they will be comfortable enough to accept the deal terms and sign on the dotted line at closing.

Selling a Business: Cash Offer or Stock Offer?

When deciding whether to accept a cash offer or a stock offer it is important to first outline what you want to achieve. While cash offers are attractive because of the liquidity and the safety of the deal—you know exactly what you will be getting—they are often valued based on the risk associated.  If, however, you are willing to accept stock in the newly formed company then you will, in most cases, receive a greater dollar valuation because of the additional risk you are accepting with the transaction.

Lets look at an example, if you have two offers on the table and one is for cash at $16 million and one is for stock valued at $20 million that can be sold over 18 months with one third of the stocks available for sale after every 6 months, which offer is better? Now assume that the value of the stocks could increase or decrease ultimately changing the valuation on your company, now which one is better? With public companies you can also hedge against the fluctuations in stock price using the futures markets. This could also be used as a tool in valuing the business prior to the sale.

Structuring the Deal

The attractiveness of one of these offers in comparison to the other may change dramatically depending on the age, future plans, career goals, and life style of the buyer. This is why it is important for the buyers and the sellers to discuss the implications of each offer and figure out a way to structure the deal to meet sellers’ needs and the buyers’ pocket book.

  • Author
  • Recent Posts
Nate Nead
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck.
Nate Nead
Latest posts by Nate Nead (see all)
  • Covid-19 Impact on US Private Capital Raising Activity in 2020 - May 27, 2021
  • Healthcare 2021: Trends, M&A & Valuations - May 19, 2021
  • 2021 Outlook on Media & Telecom M&A Transactions - May 12, 2021
Nate Nead
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this investment professional on FINRA's BrokerCheck.

Related posts

May 27, 2021

Covid-19 Impact on US Private Capital Raising Activity in 2020


Read more
May 19, 2021

Healthcare 2021: Trends, M&A & Valuations


Read more
May 12, 2021

2021 Outlook on Media & Telecom M&A Transactions


Read more

Get in touch

[]
1
Step 1

keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right


investment banking Logo

Services

  • M&A Advisory
  • Sell-Side M&A
  • Buy-Side M&A
  • Raise Capital

About

  • About Us
  • Our Deals
  • M&A Blog
  • Contact Us

© Copyright Deal Capital Partners, LLC.

Privacy Policy | Terms of Service | Listing Agreement

This does not constitute an offer to sell or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of a final private placement offering memorandum and subscription agreement, and will be subject to the terms and conditions and risks delivered in such documents.

M&A advisory services offered through MergersandAcquisitions.net. Securities transactions are conducted through Four Points Capital Partners, LLC (4 Points), a member of FINRA and SIPC. Deal Capital Partners, LLC and 4 Points are not affiliated. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck.

An Invest.net Partner