Reijmer/Russell on M&A Directions: Can We Talk? Not Necessarily
Approaching the Other Party
Here the best strategy is to let a proxy choose your words for you. By "proxy" we mean an experienced M&A adviser who understands the nuances of the situation and knows how to take the awkwardness out of the initial communication between the parties.
M&A advisers help buyers by confidentially scouting the territory, identifying the most suitable acquisition candidates, and making the buyer's intentions known to the owners in a way that will not arouse suspicion or resistance. There is almost always more openness on the seller's side when a trusted third party initiates the conversation the buyer wishes to have.
A seller who is well-acquainted and on good terms with a potential buyer in his or her region probably can approach the buyer directly—the mutual knowledge and trust are already there. Be advised, though, that approaching only one buyer candidate may not result in a favorable price for the seller.
In most cases, it's wisest for the seller to let a skilled third party manage the introductions. A do-it-yourself overture to an unfamiliar buyer might not be taken seriously or, worse, might stir negative rumors about why the seller's company is being offered for acquisition.
Understanding sellers' and buyers' mindsets as thoroughly as they do, qualified M&A advisers make sure that communications between the two sides are based strictly on fact. They also can judge whether a prospective buyer has the management strength and financial wherewithal to make an acquisition a success. Advisers can identify not only the right buyers, but the right people within those companies—people who will take the call and listen attentively to what the seller, through its representative, is proposing.
Announcing the Completed Transaction
New Direction Partners usually advises sellers against disclosing anything to the workforce at large until the last minute—the point at which the deal is fully and finally closed. This is recommended not in order to keep people in the dark, but to head off anxiety-driven behaviors that could undermine the deal: for example, resignations by key personnel reacting badly to the knowledge that the company was in the process of being sold.