Goldman Sachs Investment Banking Pitch Book
Goldman
Sachs
Description
Pros
Cons
Sale Process Alternatives
Full Auction Process
Contact broad list of credible
potential buyers prior to signing of
transaction
*
Increases probability of
maximizing valuation / terms
Provides greatest protection to
Board
Buyers more likely to engage in
full auction process relative to
post-announcement alternatives
*Limited number of motivated,
credible buyers at high premium
levels; large equity check
*
* Higher degree of leak risk; difficult
for a public company to manage
Requires longer time period to
execute
Some bidders may not participate
in broad auction process
■
■
"Market Check" Pre-Signing
Contact a focused number of potential
buyers prior to signing of a definitive
agreement
Contact typically made in the 2-4 week
period prior to targeted signing
Process may be extended if any buyers
express legitimate interest
Provides opportunity for Board to check
other buyers' potential interest prior to
signing
Potential buyers may be more willing to
engage pre-signing vs. post-announcement
No break fee, private vs. public forum,
not "breaking-up" signed deal, etc.
As a public company, Focus is well known to
most potential buyers, allowing them to
move quickly if interested
May be undertaken as long as not limited by
an exclusivity agreement with the bidder
* Depending on timing, may have shorter
period for parties to complete due diligence,
which may modestly discourage some
potential buyers from participation
Significant leak risk
*
*
Typically contact "focused" list of potential
buyers rather than exhaustive list
*
Reaction from the initial bidder? Potential to
lose interest
■
■
"Go-Shop" Provision
Will allow active solicitation of other buyers
for a period of time after signing definitive
merger agreement
During the go-shop period, the level of deal
protection may be reduced
Typically includes a reduced termination fee
during the go-shop period
✓ Provides structured opportunity to
proactively / openly pursue other potential
buyers
Easier for buyer to engage under "go-shop"
provision relative to only including fiduciary
out provision
More common in PE-led take private
*
Some potential buyers may still be reluctant
to engage / "break-up" public deal
*
Other buyers may be reluctant to pay
break-up fee, even if at a lower level
I
✓
*
INVESTMENT BANKING
DIVISION
CONFIDENTIAL
Fiduciary Out
Standard in M&A purchase
agreements for public company
targets
Allows Board to terminate the deal
to accept a superior offer from
another company - typically
subject to termination fee
Common / routine provision
Likely no objection from the bidder
Some buyers may be reluctant to
"break-up" a publicly announced
deal
* Requires payment of termination /
break-up fee
45View entire presentation