How to Mitigate and Manage Potential Value Destruction
By Mark Herndon, President, M&A Partners
A recent review of published literature in the M&A sector reveals an important gap in strategic thinking and organizational readiness. While there’s no shortage of excellent counsel regarding how to prepare a business for sale, how to value the enterprise and how to negotiate the price and terms of a transaction, there’s very little published guidance for executives leading a to-be-acquired ("Target") company during the critical period between the initial public announcement and the deal closing.
The truth is, a set of inevitable change dynamics erupt in and around the target company starting immediately upon initial public announcement. If left unmanaged, these dynamics often lead to substantial business risks that can destabilize the business, negatively impact the final closing valuation and cause enormous disruption during a period when it can least be afforded. While you can’t prevent these dynamics from happening, we believe the proactive, strategic actions of a well-prepared Target executive team can do much to mitigate and manage the potential value destruction during the critical period from announcement to closing.