Attracting Buyers, Then Kicking Them to the Curb?
Sept. 28, 2014
There are many ways to sell a business. You can more-or-less transfer ownership to a close friend/family member, you can accept the first offer you receive, you can keep it on the market for years while fielding offers and continuing to grow, or any number of other tactics.
One of the weirder tactics ever seen was recently used by Treasury Wine Estates. They showed signs that they were listing the company back in August for $5.20 a share. They ended up receiving quite reasonable offers from 2 separate private equity firms, who were then both told to take a hike.
While this may seem like an absurd business move, and completely contrary to the idea of selling a business in the first place, there is one likely explanation: The board didn’t consult with the shareholders about selling the business.
This is an important lesson for public companies. It seems somewhat strange that Treasury Wine Estates didn’t see this coming, but shareholders can hold a massive amount of power over a company, and can stop the sale of a business cold.
In the case of Treasury, they have had a rather tumultuous past, and it appears the board of directors no longer has faith in the ability of the current leadership to be profitable. The shareholders disagreed, effectively telling the board that the selling price was far too low, and they ended up winning the day. The downside is that this drama has caused the stock price to plummet, losing $0.70 in one day.
This is why it is absolutely crucial to have all your ducks in a row before making any public announcement about selling a company. Any battles like this are going to scare away potential buyers, and it can even cause your company to be viewed as less valuable than it otherwise would be. That is the last thing you want when trying to attract a buyer.
If you ever have any questions about buying or selling a business, do not hesitate to get in touch with a qualified business attorney today.