What Should A Healthcare Company Do With An Unsolicited Acquisition Offer?
(excerpt from David Chase article in Forbes)
Questions to ask yourself
1. Understand the market dynamics and what it means for your choices:
- Is there evidence the market is consolidating?
- Is the offer a viable alternative to raising equity capital?
- Do I understand how those economics work and what the structure would look like in either transaction in addition to the price? There is a lot of potential complexity in deal terms, whether it’s with a VC or a potential acquirer.
3. What does a process look like that would deliver choices for both a buyer and an equity sponsor? Timing? Cost? Distraction to the team and customers? It’s not without precedent that certain companies do fishing expeditions with limited intent/ability to complete a transaction. Hopefully a board member or an advisor knows the players in the industry and their reputations.
4. Once you’ve analyzed your potential next steps, approach your board/investors to present your logic. Remember that entrepreneurs almost never directly control exit timing. It is about market consolidation.
5. Oftentimes, the initial offer represents good synergy. There are ways to structure those transaction so that you keep a reasonable level of upside and diminish the overall risk.
6. How you’ve raised money will impact who is involved in your decision process. The more control over the company you have, the more intensely personal the situation is. It’s important to have self-reflection time and trusted, seasoned resources who can be more objective about the process.