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| Deals Webcast Series: Using non-traditional consideration to close the M&A value gap | ||
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Dealmakers are increasingly using non-traditional forms of consideration to help facilitate negotiations and bridge value gaps on transactions. For example, contingent consideration -- such as earnouts or contingent value rights -- can be useful instruments to help close deals where the outcome of future events otherwise creates too much uncertainty. Buyers and sellers often use contingent terms to tie ultimate payment to future events or performance milestones, helping to close the value gap and manage risk. Other forms of consideration, including seller financing, are increasingly common particularly in transactions whereby the seller maintains a strategic interest in the business. These transactions frequently involve retained equity interests combined with put and/or call options as well. Additionally, US corporations are increasingly exploring transactions that utilize off-shore or "trapped" cash in foreign subsidiaries as consideration in cross-border deals.
However, non-traditional consideration can also create additional levels of complexity before and after the deal closes. What are the trade-offs, and what are the situations when different types of consideration are typically most beneficial? How can you structure consideration to minimize risks and complexity? Topics covered: 1) Types of considerations 2) Potential pitfalls 3) Strategies to execute these considerations successfully Please click here to view other PwC Deals webcasts. |
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