When compiling data for M&A in submissions or awards, transactions can become more unusual, complex, or innovative due to several factors that differentiate them from standard, “run-of-the-mill” deals. Always consider the following:
– Cross-border elements: Transactions involving companies from different countries introduce complexities such as navigating multiple regulatory environments, varying legal systems, tax regimes, and cultural considerations.
– Industry-specific regulations: Highly regulated industries (e.g., healthcare, biotech, financial services) often require compliance with stringent, specialized regulations that may add layers of complexity.
– Public company acquisitions: Acquiring a publicly listed company involves securities laws, disclosure requirements, tender offers, and regulatory scrutiny (e.g., antitrust or competition authority approvals), making it more complex than private deals.
– Value: Although one component of the assessment process, there is no doubt that the value of a transaction in a given industry does play a key role. Without a high value, the matter needs to incorporate many of the points below.
– Hostile takeovers: In a hostile takeover, the acquirer seeks to purchase a company without the consent of its board, which can lead to defensive strategies by the target company (e.g., poison pills) and intricate legal maneuvers.
– Multiple stakeholders: Transactions involving multiple stakeholders (e.g., government, minority shareholders, private equity) create complex negotiations, competing interests, and varied legal and financial obligations.
– Use of innovative deal structures: Transactions that involve innovative financing methods, earnouts, stock swaps, or the use of complex instruments like contingent value rights (CVRs) or equity clawbacks can introduce financial and legal challenges.
– Post-transaction integration: Deals requiring complex integration, especially when combining differing corporate cultures, operating systems, or geographies, can increase difficulty.
– Distressed assets or insolvency: Buying distressed companies or assets often requires navigating bankruptcy laws, debt restructuring, and creditor negotiations, which adds complexity to the deal structure.
– Intellectual property (IP) issues: Acquisitions that heavily rely on IP (e.g., technology or biotechnology companies) often require thorough IP due diligence and may involve complicated licensing or patent litigation concerns.
– Antitrust and competition law concerns: Mergers or acquisitions that significantly alter the competitive landscape of an industry may require antitrust reviews or concessions to avoid regulatory challenges.
These factors can make an M&A transaction more challenging than typical deals, requiring creative legal, financial, and strategic solutions, and should be made clear to the researcher.
