In the 2000 movie Cast Away, the character portrayed by Tom Hanks, stranded on a deserted island, created a personalized friend, “Wilson”, from a Wilson volleyball. That friend helped the character survive and escape from the island. In a merger, the seller may need one or more of these friends to assist it through the merger process. One of the difficult but important decisions a seller must make up front is who at the company to confide in regarding the merger talks. The due diligence process can strain the seller’s resources. During the Covid-19 pandemic, the due diligence process can take longer and be even more cumbersome. Sellers often cannot tackle the enormous job of due diligence on their own. There may be one or more key employees the seller needs in this process. Care must be taken, because the persons chosen to assist must be trusted to not leak news of the merger talks. If those key employees exist, they can be a huge asset in the merger process. As an incentive, these key employees will often be offered an incentive bonus to be paid upon successful completion of the merger. The lesson here is that a seller should think hard about whether it needs a “Wilson”, and if it does, whether it has the key employee(s) to help it keep the volleys going while seller and buyer negotiate.
If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at firstname.lastname@example.org or 443-738-1522.
ABOUT GLENN D. SOLOMON
email@example.com | 443-738-1522
Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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