White Paper | M&A in Online Specialty Retail
The McLean Group | Jones Day
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Mergers & Acquisitions in Online Specialty Retail
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What are the potential tax consequences of a transaction for buyer, seller and their respective
stockholders?
What are the buyer’s potential post
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closing risks and obligations? To what extent should the
seller be held liable for such potential liability? What steps, if any, can be taken to reduce
potential liabilities? What will it cost to implement such steps?
What, if any, impediments exist to transferring the seller’s key tangible and intangible assets,
including real estate, IP or other property?
Should employment, consulting, confidentiality or noncompetition agreements be created, or
modified in connection with the proposed transaction?
Is the seller currently involved in material litigation that could materially impact the acquisition
or the go-forward business? Is there potential or threatened litigation?
The acquirer’s business and accounting advisors will focus on the following issues:
What are the seller’s strong points and weaknesses? How does the acquirer’s management team
plan to eliminate those weaknesses?
Has the acquirer’s management team developed a comprehensive plan to integrate the seller’s
resources?
Does the seller manufacture its own products? Does the seller take inventory risk or are its
products “made to order?” What proportions are purchased from outside vendors?
What is the seller’s past and current financial condition? What about future projections? Are
they realistic?
What is the seller’s sales and margin history?
HOW CAN A SELLER PREPARE FOR A SALE OR INVESTMENT PROCESS?
In order to facilitate an orderly and expedient transaction, there are a number of financial, operational and legal
tasks that can be addressed in the months leading up to the transaction. Privately-held companies often find
themselves unprepared to be acquired because managing the business takes precedent over internal
housekeeping matters. In addition, focusing on these matters prior to a transaction will help the seller generate
the disclosures which will be required for the acquirer’s due diligence investigation and for the definitive
acquisition agreement, and to the extent problems are uncovered will give the seller an opportunity to address
them prior to any such disclosure.
By preparing for and anticipating any due diligence issues, you will know
the answer before the question is asked, which will shorten the time from initial due diligence to closing and
greatly enhance the likelihood of a successful transaction.
We recommend considering the following matters in a pre-transaction review:
