On M&A: Auctions as Strategy
Copyright Jack Mixner 714 449 1040 www.mixnerstrategy.com
Jones Aparel. Imax. ImClone Systems. Pep Boys-Manny, Moe and Jack. Bally Total Fitness.
They all have one thing in common: each recently took itself off the public auction market when the price offered for their organizations failed to meet expectations and/or competitive bidding failed to materialize (Eisinger, page C1).
Two points of view on all this: the auction buys time for management to get things in order, and, maybe, just maybe, it will end up selling. The flip side: if the auction fails, price for the company is likely to tank (Eisinger, page C4).
Strategic Implication
We have always said to clients not to try to borrow money when they need it. Auctions are the same way. Don't wait until you are down and out to formulate an end game strategy. Start now. You end up with more strength during negotiations when your company is healthy.
References
Eisinger, Jesse. 'Buy My Company, Please': Why Some Companies Go Unsold in Merger Boom. Wall Street Journal. 23 August 2006. Page C1.