Key Ingredients for a Successful M&A Deal

By Jeffrey Cronn

A potential merger or acquisition transaction can be an exciting time for a business owner who has poured heart and soul into building a company over years or even decades. A sale represents pay-off for all that hard work.

We were proud to represent Portland-based, family-owned Malarkey Roofing Products, in a $1.35 billion deal with The Holcim Group, based in Zug, Switzerland. Malarkey, which makes sustainable, high-performance roofing shingles and has over 400 employees across three locations, was founded by Herbert Malarkey in 1956. The sale represented a great outcome for the founding family, and an excellent opportunity for the business to continue its growth.

A successful M&A transaction requires hard work, and typically takes many months of preparation. It begins by transitioning the outlook of business owners from an operational view to a transactional view. Instead of thinking like an owner, think like those who will play a key role in the deal. Potential buyers and employees of the business are two primary constituents.

Think like a buyer

As a starting point, owners should look at their business through a buyer’s eyes. Remember that operational issues that no one really thinks about day-to-day may trip up a buyer. Do you have current signed agreements in place? Or are you working on expired agreements or handshake deals? Buyers will want current signed agreements with counterparties they may not know.

Similarly, do you own your intellectual property (IP)? Do you infringe on the IP of others? Is your IP protection program truly robust, or do you have employees and contractors without IP assignment agreements? Buyers will want signed agreements and minimal ambiguity.

If you have a pending business dispute or a regulatory issue, you should resolve it, if possible, before moving toward a business sale. An unresolved dispute may make a buyer uneasy.

These are just some of the potential operational considerations—each business will have its own set of issues to be identified and addressed.

Think like an employee

It also makes sense to consider employee incentives before you move toward a deal. The business sale process is often burdensome; employees without the right incentives may begrudge the additional work and have concerns that, upon completion of the sale, they may not have a job.

For those employees who will be responsible for the continuation of the business, the new buyer will be their boss, not you. These potential conflicts of interest between owners and employees are often overlooked but are very real.  An unhappy employee can kill a deal.

Why go to such lengths?

If you don’t take the time to check every box before putting your business up for sale, buyers gain leverage. A buyer can use unresolved or ambiguous operational issues to justify a lower price or other less favorable deal terms. Good planning can help generate a top-dollar offer for your company and make it much more likely that your transaction will close quickly and efficiently.

Jeffrey Cronn is a partner at Tonkon Torp with a practice focused on M&A, corporate and business matters, and equity ownership disputes. He can be reached at 503.802.2048 or

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