The Highest Offer Doesn’t Always Seal The Deal With Founders

By Sage Duvall

Jul 16 2019

This is a guest article from Founders Advisors President and COO Wesley Legg. We hope you enjoy it!

Cash is King, however, the highest offer doesn’t always seal the deal. This is especially the case when the seller is a founder-based company, i.e., the seller is the founder or an heir of the founder. Founders, of course, want to maximize value, but that is generally not their sole focus, particularly when they are doing a recapitalization with a private equity group. Founders can be focused on a variety of other factors, including certainty of close, reputation/culture or the buyer, expertise and track record of the buyer, the fate of their employees, their role post transaction, business synergies, deal structure, etc. Buyers who are only differentiated by price are at a disadvantage for several reasons, primarily because someone else can always outbid you. Smart buyers seek to understand the desires of the seller and craft their offer accordingly, not just focused on price but also on the seller’s overall objectives in a transaction.

This is another compelling reason for sellers to run a competitive market process. Using an M&A advisor to run a process provides the seller with more options and a higher probability of reaching the terms they desire in deal. It also allows the seller to see buyers side-by-side to compare the different individuals and cultures involved. This is extremely important when doing a recapitalization, because you’re not just seeking liquidity, you’re also picking a partner.

About Founders Advisors

Founders Advisors (Founders) is a merger, acquisition and strategic advisory firm serving lower-middle-market companies. Founders’ focus is on nationwide energy, industrial, SaaS/software, internet, industrial technology, healthcare, digital media, consumer, and value-added distribution companies as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise, and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M&A Securities Group, Inc. or Founders M&A Advisory, LLC, both members FINRA & SiPC. M&A Securities Group and Founders are unaffiliated entities. Founders M&A Advisory is a wholly owned subsidiary of Founders.

For more information, visit www.foundersib.com.


Related Posts

Perfecting the SDR to AE Handoff

Aug 08 2019

A while back I spoke on a panel at the Salesloft Rainmaker event on the topic of perfecting the handoff of a prospect from the SDR to the AE. The handoff can make or break the sale. This is a topic often left orphaned by sales leaders and something that needs far more attention than it is given. SDRs are […]

Read More…

6 Ways to Create a Culture of Customer Success

Sep 10 2019

As the leader of the customer-facing parts of a SaaS organization, I was quick to take accountability and responsibility for “customer success”, which of course really meant customer retention. It took me many years to realize how flawed my thinking was and to come to understand that Customer Success is bigger than any single department. […]

Read More…

“Strategic Combinations”: A Hybrid Deal Structure

Apr 06 2023

By: Billy Pritchard As founders begin to consider various capital transactions for their business, they are often focused on two primary deal structures:  1) selling 100% of the business to a strategic buyer, or 2) partnering with a private equity firm through a recapitalization. Depending on the personal objectives of the founders, as well as […]

Read More…