Secret Banker: ‘Happy Accident’ S1/Pt.218 June 2019
That time a simple FAQ drove up the asset price
In this installment of The Dark Arts of a Deal series, an ex-banker recalls how a routine single-buyer M&A deal in a down market inadvertently heated up during Q&A. What dark arts are your team using to drive competitive tension?
Teaser sent. NDAs signed. CIMs distributed. NBOs in. Final bidders selected. VDR opened. Now it’s time for Q&A. Finally, the bidders are in the driver’s seat, giving them a chance to question the management team in the due diligence process. Without a doubt it’s the most fun part of any M&A deal – that is, if you like spending your time identifying content that your buyer is too lazy to find.
In the first deal I was part of we used Intralinks to manage the Q&A process. As questions came in, we noticed that most potential buyers were asking the same questions. Given that we had six bidders in the Q&A, we decided to post an FAQ list which would be available to all buyers – both questions and answers, in an anonymized format.
The FAQ helped speed up due diligence so much that in the next project we published a dummy FAQ that we thought would benefit all buyers. If you know all buyers are going to ask the same question, why not reduce admin and post it to the FAQ up front?
Project three came along during a bad market. There was only one buyer in the process – never a great situation. We posted our usual Q&A answers in the FAQ, and the next conversation with our buyer was an interesting one. Adding the FAQ certainly stirred the pot. Instead of assuming they were the only buyer, there was a noticeable uptake in activity as they assumed other parties were involved. After all, why would we post an FAQ unless we were receiving multiple versions of the same question? Amazing how a little proactive work to help smooth the due diligence process resulted in ratcheting up the competitive nature of the deal.
I wouldn’t say we’d necessarily use this tactic on every future deal. However, as the saying goes, every little bit helps.
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