One of the key aspects in M&A transactions is structuring to meet the commercial intent of the acquirer and seller. The acquirer and seller always have the same objective, but the perspectives may differ from a risk point of view. De-risking the transaction from the perspective of the acquirer and the seller to achieve the objective becomes key when structuring such transactions. The parameters tend to differ significantly depending on the nature of acquisition, as to whether it is an upfront full acquisition, acquisition in tranches or involves deferred consideration, some of which are discussed below.
Valuation: While a full acquisition may seem easy to structure, it does pose challenges on valuation. While the acquirer may be conservative with the projections, the seller could be quite optimistic. The valuation gap typically is resolved by a deferred consideration built in.
Please click here to read the full article by Raj Ramachandran, published in BW Legal World.
Raj specializes in Corporate Commercial, Banking & Finance and Cross Border Investments & Acquisitions.