Reijmer/Russell on M&A Directions: Can We Talk? Not Necessarily

Unfortunately, we have seen them happen more than once: breaches of confidentiality that have disrupted and even destroyed what otherwise would have been successful mergers of printing and packaging companies. Because playing close to the vest in M&As is more complicated than it may seem, a review of best practices in this sensitive area of dealmaking is well advised for every company owner with a transaction in mind.

Maintaining a discreet silence can be worth its weight in gold, literally, in several key phases of the deal. We'll address each of these points from the perspectives of the buyer and the seller.

Disclosing to Those Who Need to Know

The rule for sellers is straightforward: the fewer the people who know that the company is being sold, the fewer the obstacles there will be to closing the sale. The owner may share information on a need-to-know basis with the CFO, the director of sales, an executive assistant and, in all likelihood, no one else. The restriction on disclosure should remain in place until both the seller and the buyer are ready to go public with the news.

Buyers in acquisition mode don't have to be this tight-lipped. Letting staff know in general terms that the company intends to grow in this way can be good for morale. It also encourages employees to come forward with suggestions for acquisition opportunities.

Note, however, that we said "in general terms." As a buyer, you would not want all hands to know that you had a specific company in mind—rumors leaking prematurely to the acquisition target could blindside its owner and kill the potential deal then and there. Naturally, if a non-disclosure agreement is in place between the two parties, the buyer will be under the same constraints as the seller when it comes to sharing details. Think before speaking!