Deal structuring

Deal structuring

Closing a transaction can depend on flexibility. There are myriad ways to structure a deal, including cash, shares, deferred payments, contingent payments, payment in kind, and a variety of benefits for key personnel. AN Valuations brings years of experience in structuring deals that match the needs of buyers and sellers.

Our philosophy on deal structuring is to keep it simple. The most straightforward approach to deal structure is often cash at closing, however this might not bridge the needs of the buyers and sellers. Uncertainties around the target company’s future prospects, financial constraints of the buyer or a positive outlook for the buyer’s future prospects are just some of the factors that can lead to alternative structures.

There is an old expression, “A bird in the hand is worth two in the bush.” In deal terms, payment today is worth more than future payment. If a seller is offered future or contingent payment, they will want to be compensated for time and risk. AN Valuations can help you with pricing these factors.

Some deals are paid partially or fully in shares. When the buyer is a private company, the seller may bear risk converting the shares to cash, however they can participate in the potential upside of future value. Whether the buyer is a public company or private, the buyer and seller will both need to contend with dilution, which decreases share price. This can be managed in a myriad of ways from adjusting the deal value to applying multiple share classes.

Aside from the standard approaches to deal structuring, there are other tools that buyers and sellers can use to finalize a deal. These include, amongst others, key personnel benefits, seller or buyer guarantees and payment in kind.

AN Valuations stands ready to help you close your deal and find a win-win solution.

Companies trust us for our experience and service-minded approach.