CFO Intelligence Magazine – Spring 2023
Andrew Zezas
Real Estate Strategies Corporation, Strategist and CEO
A large, publicly held multi-billion dollar company wanted to sell its West Coast subsidiary, along with the building that housed it. But after putting the unit on the market and identifying a buyer, the negotiations nearly broke down during the 11th hour — the would-be buyer refused to include the building in the transaction, and demanded a reduced price for the subsidiary. Scrambling to separate the assets at the last minute, the seller did manage to find a buyer for the building, at a $30 million discount, while losing considerable value on the final sale price of the subsidiary
“A major sell-side goal in an M&A is ensuring that the transaction is completed within a reasonable timeframe, with minimal cost, and at a sale price that reflects an appropriate enterprise value,” counsels Andrew Zezas, Strategist & CEO of Real Estate Strategies Corporation, a New Jersey-based national corporate real estate advisory and transaction services firm.
For a seller, an intelligent M&A strategy starts with the recognition that potential buyers generally fall into two broad categories:
- Financial buyers: private equity or other investors who may not be in the same line of business as the seller, but who believe they can enhance operations and achieve a better ROI; and
- Strategic buyers: operators in a similar or related business who seek to expand or enhance their current product or service offering by acquiring and operating other companies.
“Financial buyers are generally interested in the cash flow that a business generates, and they have a predetermined exit strategy,” observes Zezas, who is also the Host, Publisher & CEO of CFO Intelligence magazine. “Consequently, they may not have the expertise needed to run the business in a highly efficient manner, and will probably look for companies with an effective management structure and employee base already in place.