Mark Brady, investment banker and M&A expert, recently sat down with Alex Verkhivker to share some of the lessons he’s learned from the merger of two iconic consumer brands.
Mark Brady is the proud alumnus of the Chicago Booth School of Business. Mark attributes his longevity in M&A to the economic and financial tools he gained at Booth. Booth provided him with a powerful means of understanding markets, prices, and incentives in the M&A environment. With Verkhivker, Mark outlined lessons learned from a successful acquisition while giving advice for both buyers and sellers on getting deals to close.
In 2008, Mars had decided to acquire the Wm. Wrigley Jr. Company, who William Blair represented, for roughly $23 billion. The deal brought the two largest confectioners together from a distribution standpoint. An important factor in making any deal close is the inclusion of a target termination fee built into the contract. In the Mars – Wrigley deal there was a built-in $1 billion reverse break fee should Mars walk away from the deal. Including a termination fee provides the acquirer with assurance that the target won’t consider other bids and protects the seller if the acquirer decides to walk away.
Since only half of deals are considered successful, Mark gave a few more tips on how to make sure deals close:
- Consider the right amount of competition. Buyers want to feel like they have a chance to win the bid process but you also want a healthy amount of competition between said buyers.
- Sellers should be conservative when communicating performance expectations. If they are realistic, it increases that chance that the deal will close
- Lastly, a seller and buyer need to have rigorous understanding of strategic alignment and how the acquisition will bring the two parties together to create value in the market.
See the full interview on the Chicago Booth Magazine.