Deal Structures: Examination of Different Deal Structures through Real-World Examples
By Sebastian Amieva
Hi there!
As you may know, understanding different deal structures is crucial for successful business acquisitions. This article will explore various deal structures through real-world examples.
Here are real-life examples of 10 different deal structures:
Asset Purchase:
In 2019, Microsoft acquired specific assets related to Nokia's mobile phone business, including patents and technology, allowing Microsoft to enhance its mobile device capabilities.
Stock Purchase:
In 2020, Salesforce acquired Slack through a stock purchase, acquiring all outstanding shares of Slack and integrating it into their suite of business collaboration tools.
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Merger:
In 2016, Dow Chemical and DuPont merged to form DowDuPont, creating a global leader in the chemical industry with enhanced capabilities and synergies across various business segments.
Joint Venture:
In 2019, Toyota and Subaru formed a joint venture to collaborate on developing electric vehicles and related technologies, combining their expertise and resources to accelerate innovation.
Earnout:
In 2017, Facebook acquired Oculus VR, the virtual reality company, with an earnout provision based on the achievement of certain performance targets, ensuring that the sellers benefited from the future success of the company.
Leveraged Buyout (LBO):
In 2007, the private equity firm Blackstone Group acquired Hilton Hotels through an LBO, utilizing significant debt financing to complete the transaction and later taking the company public.
Reverse Merger:
In 2004, Google went public through a reverse merger with a shell company called "Google Inc." This allowed Google to become a publicly traded company without going through the traditional IPO process.
Management Buyout (MBO):
In 2013, the management team of Dell, led by founder Michael Dell, partnered with Silver Lake Partners to take the company private through an MBO, allowing them to regain control and restructure the business.
Cross-Border Acquisition:
In 2018, the French company LVMH acquired the Italian luxury jewelry brand Bulgari, expanding its international presence and strengthening its position in the luxury goods market.
Recapitalization:
In 2015, Twitter underwent a recapitalization by issuing new equity shares to raise additional capital for strategic investments and future growth initiatives.
These real-life examples demonstrate how each deal structure has been applied in various industries and contexts to achieve specific objectives, drive growth, and create value for the companies involved. It's important to note that the circumstances and outcomes of each deal can vary and are subject to the unique dynamics of the companies and the market at the time of the transaction.
Which one is your favorite deal structure?
Sebastian H. Amieva
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