Black Irish
Wise Guy
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Can any of you stalwart IE brethren shed some light on this proposed M&A transaction? My employer is a privately owned restaurant company and the big bosses have been talking up all year about how they are planning to buy another concept to put under our umbrella. On a recent call, our COO gave us some details, saying the deal is about done. The deal will take effect at the beginning of the year. However, both sides have the right of refusal or re-negotiation if certain EOY profits before EBIDTA are not hit.
I’m no expert, but if this is a straight up acquisition, why would the other company care what our profit numbers are? We can either afford to buy them or we can’t. The bank loaning the money may care, but it shouldn’t matter what my company’s balance sheet is to the target of acquisition. It’s like buying a house. If you can meet the asking price the homeowner doesn't need to see your pay stubs and bank balance. That's the bank's end of things.
Unless I’m missing something, the way this deal is being described makes it sound more like a merger than an outright acquisition. Like I said, why does the restaurant concept being sold care if the buying concept hits a certain revenue target? But if it's a merger, then it makes sense that both parties are combing over each other’s books. A merger is a whole different ballgame than an acquisition and the fact that my company keeps saying it is the latter when it looks more like the former is strange. Does anyone have any insight on this?
I’m no expert, but if this is a straight up acquisition, why would the other company care what our profit numbers are? We can either afford to buy them or we can’t. The bank loaning the money may care, but it shouldn’t matter what my company’s balance sheet is to the target of acquisition. It’s like buying a house. If you can meet the asking price the homeowner doesn't need to see your pay stubs and bank balance. That's the bank's end of things.
Unless I’m missing something, the way this deal is being described makes it sound more like a merger than an outright acquisition. Like I said, why does the restaurant concept being sold care if the buying concept hits a certain revenue target? But if it's a merger, then it makes sense that both parties are combing over each other’s books. A merger is a whole different ballgame than an acquisition and the fact that my company keeps saying it is the latter when it looks more like the former is strange. Does anyone have any insight on this?
