What Is the Confidentiality Bubble In M&A?
It is a long way to go from starting to look for the ideal executive opening and landing the job, indeed – here are some top tips from top executive IT staffing companies, https://ikadre.com/, about how to make that way shorter:
- Brush up your resume – resume writing is governed by trends, so it might not be enough to add your last job to your old resume; you should update the entire document. Check out some trendy online templates to find inspiration and restructure your information to highlight your best skills and your most relevant experience. Recruiters also recommend job seekers to edit their resume whenever they apply for a new job to make it meet the specific requirements of the job;
- Pay attention to your online presence – most recruiters will check the candidate’s profiles on social media, so be careful about what you like, share, tweet and comment on;
- Prepare for the tough questions – executive jobs come with lots of responsibilities, therefore the recruitment process usually involves multiple rounds and lots of tricky questions. Try to anticipate those questions and formulate your answers; you can also do some role play at home and register yourself answering awkward questions to see where you can do better.
Executives are certainly the highest-paid employees in any company, but paradoxically, only very few of them are actually the authoritative leaders, strategic thinkers and great executors that they are supposed to be. The discrepancy between what leaders are expected to be and what they actually are will inevitably lead to issues, which means that the number of executives that are as talented and knowledgeable as they are expected to be is smaller than it seems. The phenomenon actually generates a kind of labor shortage at top levels and makes it extremely challenging for companies to find the best matches for their executive positions.
The problem has slowly, but radically changed the way executive searches are approached and conducted. IT recruitment specialists affirm that the trend today is for the companies looking for executive candidates to search not only among active job seekers, but also among the executives currently employed. In the latter case, the employer obviously needs to offer more to the approached talent and that “more” usually needs to include flexibility in terms of work conditions as well as other perks and benefits, such as child daycare, premium gym memberships and premium medical insurance, to mention just a few of the most commonly offered and accepted features.
If you have recently left your previous executive position, you probably want to make the time that you spend out of a job as short as possible. There are many ways that you can use to search for the next challenge – you can search job boards and ads on various platforms and talk to key people in your industry or you can turn to professionals to make the transition not only faster, but easier, too. Here are the benefits of working with executive recruiters:
- Help to polish your resume – executive recruiters can provide help with making your resume as attractive and as informative as possible, ensuring that the resume will capture the attention of the decision makers at the companies looking for an executive like you;
- A wider pool of opportunities – specialized executive recruitment agencies possess in-depth knowledge about your industry and they know what is going on in your niche, so with them, it is easier to find the right employer;
- Assistance all the way – executive recruiters do more than just collect resumes and recommend candidates to employers. They participate in all steps of the process, efficiently representing your interests during the negotiations with potential companies to work for.
A boutique investment bank is a type of investment bank that specializes in certain industries, in certain geographical regions and usually only in some types of corporate finance, especially in mergers and acquisitions, restructuring and capital raising. They usually assist the companies involved in smaller transactions.
A trusted sell my business broker advised me that turning to a boutique bank instead to a larger bank to finance a merger and acquisition transaction can have many advantages:
- Priority treatment – boutique banks usually handle deals that are of little interest to larger banks and they offer more attention, more personalized treatment to their clients than larger financial institutions. M&A deals usually involve lots of day-to-day activities that can be more efficiently handled by a bank that focuses on the personal relationship with their customers;
- In-depth industry experience – a boutique bank that specializes in the client’s niche might have more insight and experience in handling transactions within that particular niche than larger bans and such a bank might also provide assistance with multiple aspects of the transaction;
- Boutique banks are usually cheaper – the financing solutions provided by boutique investment banks can be cheaper due to their higher level of flexibility as well as due the lower minimum fees practiced.
Mergers and acquisitions are transactions that the participant companies enter for financial benefits and with the aim of value creation, but they are also transactions that often come with high costs for all the parties involved. Very few companies are able to cover those expenses out of their pockets and they choose a different financing method – According to iKadre M&A consultants, here are the financing options available:
- Exchanging stocks – this method is quite safe for everyone involved. The solutions consist of the buying company exchanging its stock for shares in the seller company;
- Acquiring debt – many merger and acquisition deals are motivated by the seller’s inability to pay their debts. A frequently used method to finance the transaction on the buyer’s side is to take over the seller’s debt in return for ownership over the seller company;
- Initial public offerings – in this process, a company’s shares are sold to investors in order to raise capital for development;
- Loans – applying for a loan is perhaps the most expensive way to raise the money necessary for financing a merger and acquisition transaction. The loans available for these purposes usually come with higher than average interest rates, but in some situations, taking out a loan might be the only solution to move forward.
Mergers and acquisitions are complex processes that require the participation of many specialists and experts. The process is usually lengthy and involves lots of legal aspects that requires the knowledge of a specialized attorney – According to business brokers with lots of experience, here is what an M&A can do:
- Conducting thorough research – your M&A attorney will perform a thorough research of the other company that is involved in the transaction to give you a clear and realistic idea about the other company’s legal and financial situation;
- Drafting documents – merger and acquisition transactions involve the preparation of lengthy documentations, complete with complicated contracts, memorandums of due diligence, non-compete agreements, letters of intent and many others. Your attorney will draft these documents and will amend them as needed to reflect the outcome of the negotiations before closing the deal. Your attorney will also make sure that the documents associated with the deal adhere to all the applicable state-level and federal laws;
- Presenting the risks involved and ways to mitigate them – any major transaction involves risks and it takes experience and professional knowledge to assess those risks. Your attorney will inform you about any potential pitfall or risk posed by the M&A to help you make informed decisions.
An M&A deal structure practically refers to the terms and conditions of the merger and acquisition deal, a binding agreement between the participants of the deal that contains the rights and the obligations of the involved parties.
Deal structuring is an essential part of any M&A transaction, the part that involves the establishment of the priorities of each of the participants. If you are wondering how to sell your business, there are three common ways to structure an M&A deal:
- Asset acquisition – with this structure, the buyer purchases the assets of the seller. The buyer can choose which assets they want to buy and the seller continues to be a corporate entity and the owner of the remaining assets;
- Stock purchase – in this structure, the buyer does not purchase any assets directly. What changes hands is the seller’s shares, which means that the buyer takes control over the seller’s assets as well as their liabilities;
- Mergers – the concept is often used as an interchangeable term of acquisition, but it refers to a deal in which the two participants agree to form a new corporate entity. In this structure, all the assets and liabilities are transferred to the new entity. The process is usually simpler and easier than in the case of the two other structures.
- The letter of intent is an essential, but non-binding document in any merger and acquisition transaction – the document which outlines the buyer’s intention to purchase the seller’s business and specifies the proposed price and the terms. The phase of elaborating the document and signing it by both parties involved in the transaction precedes the phase of due diligence, during which the buyer confirms important information about the seller, such as the seller’s financial situation, legal status and range of customers.
- Leading Mergers and Acquisitions advisory firms affirm that the letter of intent is elaborated in the third phase of the preliminary discussions between the two companies, after the initial phase of discussing the general framework for a potential agreement and a second phase of entering various non-disclosure agreements and memorandums. The letter of intent practically summarizes the most important terms of the deal, including the payment terms, the assets that are going to be purchased by the buyer, the seller’s liabilities, provisions referring to confidentiality and exclusivity, a timeline for the due diligence phase and lots of other aspects. The contents of the letter of intent are usually used as a template for the final, binding purchase agreement signed by the parties at the end of the M&A process.
There are many ways to ensure that a company is growing, one of those ways being through the acquisition of other companies to increase market share, to get access to new markets, to new technologies or simply to eliminate competition. In terms of how frequently a company engages into M&A as a method of achieving growth, companies can be serial acquirers, making at least one acquisition per year, or one-time or accessional acquirers. Out of the two types, serial acquirers seem to be more successful – here is why:
- Larger size – the companies that usually engage in serial acquisitions are larger companies, usually companies valued to over one billion, which also means that their financial possibilities are better upfront, at the first acquisition. If they use the right criteria and strategy to choose their acquisition targets, their capital continues to grow, ensuring a continuously growing buying power;
- Experience – the statistics show that the majority of M&A deals are doomed to fail within a year from closing. However, serial acquirers fare much better when it comes to the percentage of successful M&A transactions due to the fact that they accumulate experience with each one of their transactions, learning how to integrate the acquired organization.
- If you would like to learn more about the M&A process, or need support to help ensure a successful deal, contact https://ikadre.com/, for expert knowledge and consultation.
The term “confidentiality bubble” is used to refer to arrangements that restrict the flow of information within and between corporations to protect the short-term and long-term goals and interests of the corporations. The word “bubble” in the phrase is especially befitting in the case of merger and acquisition deals – sensitive situations and processes that are, like bubbles, especially fragile, vulnerable, affected by tensions from the inside and the outside and with a high potential for bursting.
Whether two companies join forces in the form of a merger and establish a new corporate entity or the transaction takes the form of a friendly or hostile acquisition, if you want to know how to sell your company, be aware that the process will involve numerous non-disclosure agreements, contracts, letters of intent, due diligence agreements and lots of other documents that contain confidential information pertaining to the involvement of the two parties. Any disclosure of what is contained in those documents can have catastrophic consequences for the new entity formed as the result of the merger or for the future of the acquisition deal. This also means that the creation of the bubble is essential for the success of M&A, but a reasonable balance must be found between keeping everything a secret and providing employees the information they need for being able to stay confident regarding their future at the company they are employed with.