Positioning a Technology Company for Acquisition

A glance at the table of contents of Mergers & Acquisitions: A Strategy for High Technology Companies(reprinted below) from Fenwick and West will give you an idea of the comprehensive and valuable nature of this resource for nascent technology companies looking to be acquired. As the article states:

"The statistics indicate that [a technology company] TechCo is more likely to be acquired than it is to go public. Given that reality, TechCo should invest the time to identify [larger companies] LargeCos that are the best candidates to meet TechCo's strategic needs. It also should identify the strategic objectives of those LargeCos and keep that data in mind during its business planning process.

It is one filter to determine whether TechCo's business decisions will expand or limit its value and exit opportunities. If acquisition remains the most probable exit strategy as TechCo grows, it might consider partnering arrangements instead of capital-intensive expansion of its infrastructure.

If TechCo decides to enter into merger negotiations, it should involve its investment banking, legal and accounting advisors early. They can help TechCo focus on what issues are critical to it, its Board of Directors, its shareholders and its employees.

Knowing TechCo's key issues at the beginning of the process increases the probability of meeting their needs. Planning for, negotiating and closing the acquisition of TechCo will be one of the most intense and challenging experiences of your professional life. Accomplishing an acquisition that meets the objectives of all of TechCo's constituencies can be one of the most rewarding."

Here is the article's table of contents:

Why Do Companies Acquire Other Companies?
What Creates Value in an Acquisition?
What Destroys Value in an Acquisition?
Why Do Some Acquisitions Fail?

Deciding to Be Acquired
Acquisition vs. IPO
Positioning TechCo to Be Acquired
When Should TechCo Consider Being Acquired?
The Acquisition Process
Use of an Investment Banker

Key Deal Issues
Valuation and Pricing Issues
Risk Reduction Mechanisms
Personnel Issues
Acquisition Structure
Type of Consideration Used
Tax-Free Acquisition
Acquisition Accounting

Troubled Company M&A Issues
Employee Incentive Issues
When TechCo is Near Bankruptcy

Implementing the Deal
Letter of Intent
Disclosure of Acquisitions
Time and Responsibility Schedule
Definitive Agreements
Board Approval
Necessary Consents
Integration Issues

Appendix A: Letter of Intent
Appendix B: S-4 Merger Time and Responsibility Schedule"

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