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Is M&A the Future for Venture Backed Companies?
by David Wolf
Nearly 10,000 companies received their first round of venture capital funding in the last ten years. Of that number about eighteen hundred have gone out of business while an equal number have been acquired or merged with another company. More than seven hundred companies managed to go public (many that went public in the bubble have since been acquired or are now out of business; but that’s another story). This means that there are over 5,500, relatively new, venture-backed companies that are still private and independent.
In today’s environment, these companies are not likely to go public. Moreover, while many of these companies have achieved reasonable results for lifestyle businesses, they will never achieve the growth and returns that their investors desire. So what is going to happen to them?
[FULL STORY]
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Negotiating M&A Intermediaries Engagement Letters
The Second in a Two-Part Series
Editor’s Note: This is the second part of a two-part article on hiring an intermediary to assist with M&A. The first part, published in the May issue of The Mercator Monitor, addressed fees and this second part discusses other considerations.
Intermediaries frequently seek to expand the nature of their engagement in the engagement letter. Their boilerplate forms typically provide that their engagement (i.e., the matters on which they get paid) includes not only a sale of the company, but also a private minority investment in the company or a strategic relationship. The scope of the engagement should be limited to what the company wants to use the firm for, but, in fairness, the intermediary needs to protect itself in a situation where the nature of the transaction changes during the course of an engagement; for example, the company decides to accept a significant investment from a potential acquiror introduced by the intermediary. In that case, it is hard to argue that the intermediary is not entitled to a fee.
[FULL STORY]
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ARCHIVE
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Issue 5
May 15, 2003
Vol. 2
Issue 3
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Issue 4
March 17, 2003
Vol. 2
Issue 2
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Issue 3
January 15, 2003
Vol. 2
Issue 1
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Issue 2
November 19, 2002
Vol. 1
Issue 2
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Issue 1
September 12, 2002
Vol. 1
Issue 1
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