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The farce of the deal: what lies buyers and sellers tell during the M&A process and what they mean

People will say all kinds of things to get what they want, whether it’s a kid hoping for a new toy or a company angling to do a deal. During the merger process, acquirer and acquiree make promises they won’t keep and claims they hope the other won’t try to corroborate. “If it’s not in the contract, it’s not real,” says one media executive who has gone through the M&A wringer. Here are the 10 things buyers and sellers all say — and what they really mean, according to four veterans of media M&A.

Media consolidation has ballooned, with older media companies racing to stay ahead and younger ones trying to stay afloat. In the first half of 2018, the amount of money going toward media mergers and acquisitions soared by 440 percent year over year to $323 billion, per Thomson Reuters. Consolidation begets more consolidation. That pressure to get deals done can push acquirer and acquiree to make promises they won’t keep and claims they hope the other won’t try to corroborate. “If it’s not in the contract, it’s not real,” says one media executive who has gone through the M&A wringer. Here are the 10 things buyers and sellers all say — and what they really mean, according to four veterans of media M&A.

BUYERS

What they say: “One plus one equals 11. With our respective expertises, if we join forces, we can drive tons more business.”
What they mean: You have something that will help to drive tons more business — for us. But don’t expect us to return the favor for you. Besides, if you don’t drive tons more business for yourself, then we can say you didn’t earn the money we promised to pay you for sticking around after the acquisition.

What they say: “We love your business and don’t want to change a thing. You’ll continue to operate the way you always have.”
What they mean: Either we haven’t decided yet how we want to change your business, or we don’t want to tell you until after the deal closes.

What they say: “Don’t worry. All your employees will be safe.”
What they mean: All your employees will be safe — until they become our employees and we decide that they overlap unnecessarily with our existing employees, especially our HR and finance departments.

What they say: “You will have access to our capital to finance any acquisitions you may make.”
What they mean: We might help you pay for an acquisition, but then we might decide to make it our acquisition, not yours. And you won’t get a finder’s fee.

What they say: “We want you to have a seat at the table on the corporate level.”
What they mean: We would like you to join a corporate-level meeting or two. If we like what you have to contribute, we might put you in charge of an organization that we’re not sure what to do with. Worst-case scenario: You fail and we find a way to count it against your earn-out.

SELLERS

What they say: “Our executive team is committed to being here for the long haul.”
What they mean: The executive team is committed to staying with the company until they hit their earn-out and can retire to a beach for a year to dream up their next company.

What they say: “On average our employees stay with the company for X number of years.”
What they mean: Some employees have been with the company for X number of years.

What they say: “We have received offers from three other companies.”
What they mean: Our banker has asked at least one other company if they’d like to buy us. We’re scheduled to meet with them next week.

What they say: “We have not committed to selling our company but are exploring our options as part of our fiduciary duty to our investors.”
What they mean: We hired a banker for a reason. We intend to sell. Do you intend to buy?

What they say: “Here is our five-year plan.”
What they mean: Here is our actual six-month plan and where we think you’d like us to be in five years because we have no idea.

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