Negotiation Techniques in M&A

This course forms module 2 of the Expert Strategies and Negotiation Techniques in M&A Training Week Every year millions of dollars change hands on mergers, acquisitions. The high stakes, extreme time pressure and limited understanding of how to manage the negotiation process causes mistakes to happen. This programme focuses on negotiating the key aspects of the transaction which impact value for both buyer and seller and on creating the right framework and strategy for enhancing value to the seller or retaining value for the buyer. The early part of the course places considerable emphasis on initial negotiating tactics in M&A deals. In particular, when viewed through the eyes of a seller, the course covers the general tactics that may be deployed in enhancing the value of the assets or business for sale. The programme then develops by explaining the structural points of an offer that could impact on valuation, and how these might be negotiated. Participants will gain a sound knowledge of the negotiation challenges within the M&A process and how these can best be managed.
Day 1 Negotiation Strategy What are the key issues in developing a negotiating strategy? Understanding the negotiation process Negotiation tactics for closing the gap Managing the negotiation environment Team selection issues Role of investment bankers and other advisors Developing a negotiating stance Strategies for Maximising Value for the Vendor Acquisition defence strategies Practical issues in their application Double track approach to realising value Refinancing – pros & cons IPOs Demergers and hive-downs Negotiating – the Initial Stages (pre-signing the SPA) Heads of Agreement (MOU/LOI) as a negotiating tool Advantages of using heads Disadvantages of using heads Guidelines for negotiating heads Legal issues in re the heads (enforceability) Negotiating aspects re the exclusivity agreement Confidentiality agreement – rationale and use and real application Selling a Business: General Tactics for Enhancing Value A lateral approach to identifying value Identifying the “best” buyer – key criteria Different types of buyers – strategic versus private equity Summary of key differences Identifying what they want Sale, demerger or hive-down Using the appropriate sale process to extract value Auctions generally When to use an auction – pros and cons What kind of auction is most appropriate Day 2 Tactics for Retaining Value in the Auction Process Vendor due diligence What is it Use and application Pros and cons Vendor assist – how it can enhance the deal Stapled financing What is it and when to use it How it can enhance value Other tactics to extract value Milestones in the exclusivity Pay to be involved Accelerated auctions Dealing with Management Conflicts (retaining value) Identifying conflict and potential value erosion from Managers Using sweet-heart deals to enhance value Rationale Typical terms Other tactics to avoid value-leakage Reverse warranties – to minimise risk Structuring the Offer: Impact on Value Understanding the underlying value Assessing the value drivers Separating value logic and value data Making best use of due diligence Understanding the fundamental business risks Techniques for mitigating the risks Value versus price The role of synergies -value is in the eye of the beholder Valuing synergies Interaction of price & terms – how the terms of the deal can impact value Issues affecting the overall value Representations & warranties as a tool for limiting exposure Structuring the Deal Different ways of structuring the deal – impact on value Acquisition of assets – key issues and application Acquisition of shares – key issues and application Structuring the Consideration The main forms of consideration: cash versus shares Pros and cons of cash Pros and cons of shares Using other forms of consideration to bridge the value-gap Senior secured debt Asset-based finance Bridge financing Mezzanine debt Hybrid bonds Payment In kind (PIK) Subordinated seller notes and earn-outs Course summary and close