M&A of Family-owned Business
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I’d like to hear from anyone who might have closed an M&A transaction for a family-owned business that involved multiple ownership structures, several ultimate beneficial owners, and interrelated transactions. How was complex was the DD process in terms of stakeholders involved, convenience to access information, major red flags?
I am very keen to know about this topic as well. I am working on one case now but so far we have proposed a “Drag-Model” for the family to agree to all the future acquisitions to prevent future conflicts.
I think lawyers play a very big role in this regard even if the business is family owners and has multiple structures. However, DD is still required and perhaps a lot more work is required for DD in a private company vs. a public company.
I think family owned business and privately owned business are similar. Personally, I will do DD on the key person and talk to its employees to have different views.
Access to information is a tricky one, especially given the different regulatory environments. Of course, protections can be built into the SPA, but no acquirer wants to have to rely on these transactions, especially given the time and effort and cost that goes into closing a transaction.
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