Quantifying Year-End M&A Activity
The second exception involves those deals that are completed privately between buyer and seller without an “auction process.” These are “opportunistic” deals that require the buyer to react — and as quickly as possible — usually as soon as they show up; busy season or not.
I am involved in three right now. They normally entail all the same painstaking pre-Letter of Intent (LOI) investigation as companies sold in a broad-based auction process — only on a much shorter time fuse.
For example, just recently, one buyer conducted an in-house session with all its key marketing and merchandising staff to brainstorm and try to quantify the synergies, cross-promotion and fulfillment advantages of an acquisition. The objective was the quantification of the incremental EBITDA of the acquisition; but if completed ASAP.
This would probably mean during or near first quarter 2007, as most acquisitions require a 90 to 110-day window for completion after a signed LOI. Some are shorter, but normally only if they don’t also require raising at least part of the transaction financing from the outside. In this case, quick early investigation and completion of an LOI (during the busy season) is the immediate objective. It’s not a simple task.
So, even when you don’t see many catalog acquisitions announced in the press, there always are many deals being discussed or attempted in the background. And that’s true even if we are in the peak of the busy holiday season. And you thought you were the busiest person anywhere? No way.
If you have any questions about what I’ve discussed this week, please fill out the form and I’ll be happy to answer them.