Mergers and Acquisitions Q & A
More than any other CSC Capital client service mergers and acquisitions is a “game.” A high risk high reward game of intelligence, experience, expertise, dedication, commitment and focus. Perhaps that is why everyone refers to the process as a “deal.” In fact some people who play the game today, don’t know the rules, have no respect for tradition and the ethics that make the game worth playing at all. Some of the biggest corporate scandals in the past generation have found their roots in extensive and unwise merger and acquisition activities. Many of these have ended up as a series of divestitures or even liquidation.
Sports television many years ago used to say “the thrill of victory or the agony of defeat.” This is also been true with mergers and acquisitions for the last couple decades. The game is usually seen as a “winner take all” or as a “zero-sum” concept. Thus the results of many mergers and acquisitions are often disappointing as several empirical studies have indicated. Unrealistic high valuations causing enormously high debt service, employee turnover, the lack of synergy realization, and corporate greed have all played a role in merger and acquisition failure. However, CSC Capital and Summit believes that this does not have to be the case.
In business there are two ways of growing a business; organically or through mergers and acquisitions. The former may take years or generations to accomplish; the latter may take six months. However both are honorable. Clearly, since the 1980s the mergers and acquisitions environment has seen a new breed of players; leverage buyout specialists, corporate raiders, and private equity groups. Using a simply analogy, these types are similar to an real estate investor who buys a fixer upper; after the buy it they repair it, hold it for a while and sell for a profit. And while there is absolutely nothing wrong with the goal of corporate performance improvement and profiting because of it, there is certainly something wrong with unethical intentions, and profiting because of them.
Traditionally the merger and acquisitions profession was about giving corporate development advice to clients and today Summit lives by this same single standard – we only provide objective advice. CSC Capital and Summit do not take equity positions, or swap fees for equity. We don’t accept earn-outs or stock options, or leverage our fees on future performance criteria. To the firm all the above taints objectively in giving advice.
What is Summit Mergers & Acquisitions professional code of ethics?
- We will not make any promises that we are unable to live up to.
- We will never withhold important facts or deliberately mislead either a buyer or a seller.
- We will respect the confidentiality of every client’s proprietary information.
- We will never knowingly calculate or misrepresent the market value of a seller’s company.
- We will present the seller with all offers received as soon as we receive them.
- We will only engage professional legal and tax outside advice when needed and only through experienced and trusted advisors.
- We will only offer the firm’s restructuring services to a seller or buyer as a vehicle to ensure a successful transaction and only after it is obvious that this remedy is necessary to complete the transaction for client’s maximum benefit.
- We will conduct the process in a logical and orderly format, informing our client’s on our progress every step of the way.
- We will never accept equity as compensation or payment upon achieving pre-established performance criteria after the transaction is completed.
- We will represent our client’s best interests at all times and to the utmost of our abilities.
- We only conduct mergers and acquisitions advisory work.
How does Summit Mergers & Acquisitions get compensated?
Our fees are based upon results not promises. Our success fees are based on a percentage of the total transaction value, payable when the deal is closed. Our fee schedule is comparable to that of other leading mergers and acquisitions advisory firms. To partially cover our expenses during the process we also change a monthly retainer.
What makes Summit Mergers & Acquisitions different from other firms in the industry?
The value of synergy that comes with being an affiliate of CSC Capital. Mergers and acquisitions intermediaries skill set is usually centered around acquiring listings, the marketing of those listings, and driving transactions to close. Sounds very similar to a real estate agent. Indeed, both act as intermediaries between seller and buyer, in a very competitive sales driven environment. This analogy is also factual based as most business brokers work for the commercial divisions of real estate companies. However, unlike a real estate sales professional, the process of merging two mid-size businesses into one, or valuing a third generation multi-state corporation with $ 400 million in annual sales, or conducting the analysis of a distressed company with the ability to provide solutions, or controlling a process that includes financial and legal due diligence, or assisting in divestiture negotiations between two former rivals, is a bit more daunting for one professional to handle alone. It takes a team of professionals, and with team members that have certain specialized skill sets.
On any given transaction during any phase of the process, we have the resources to take on any challenge. From the Industry Practices Division professionals, with their global industry experience and network, to CSC Capital Corporate Restructuring group with their holistic systems approach to turnarounds, to Compass Park Consulting Partners who conduct the best corporate diagnostics in the industry, to our management information specialists who assist in crunching the numbers, Summit has the available resources. When and if financing is necessary we can turn to our affiliate NWX Financial Group, for arranging debt or equity financing. We believe synergy is critical in successfully conducting mergers and acquisitions, and our client’s are assured that they have the resources of our entire firm working behind the scenes ensuring that we deliver the anticipated results.
What are ten solid reasons to consider acquiring another company?
- The target company is holding a unique market position
- The target company is a potential turnaround opportunity
- The target company and your company has complimentary skill sets
- The target company will provide geographic expansion
- The target company will provide you the ability to become more efficient and more profitable
- Though acquiring the target company you can eliminate the competition
- The target company will provide your company with increased breadth and depth of product lines
- The target company will improve the possibility of your company conducting an Initial Public Offering
- The target company will provide your company access to new customer groups
- By acquiring the target company you can stop opportunities for your key competitor(s) to make gains on your market share