It is no secret that business acquisitions, both friendly and hostile, are complex transactions that rarely go off without a hitch. Whether it be legal complications, which put a deal on hold, or shareholder disagreements, which prevent action from being taken, there are no shortages of reasons for a business acquisition to be slowed down.
For instance, take the situation currently faced by Dell Inc. in their potential acquisition by CEO and founder Michael Dell. Mr. Dell, backed by the investment firm Silver Lake, is offering approximately $24.4 billion to acquire the struggling computer company. This offer works out to $13.65 per share, a value that several major shareholders argue is too low. Amongst those who may attempt to delay or entirely prevent the acquisition include T. Rowe Price, a mutual fund manager, Carl Icahn, a private investor, and the investment firm Southeastern Asset Management.
Their prime concern appears to be the value of the buyout, which many argue is too low considering that stocks in Dell Inc. were valued at nearly $24 per share in 2007. Upon hearing news of the potential acquisition, the value of Dell Inc. shares rose approximately 2% to $14.32, leaving their current trading value higher than the buyout offer.
Whether these disagreements will doom the acquisition, delay it or get quickly resolved is yet to be seen, but the case itself shows some of the potential roadblocks that can come along with large or even small-scale acquisitions. For business owners contemplating an acquisition, considering and preparing for all of the possibilities, legal and otherwise, can be the difference between a successful acquisition and a failed one.
Source: US News "Dell Inc. committee defends $24.4B sale as best choice," Michael Liedtke, March 6, 2013