Selling to a Publicly Traded Company

Built To Sell Radio Episode #341

Tony Falkenstein

In 1988, Tony Falkenstein started Just Life Group, one of the first water-cooler companies in New Zealand.


In 2016, Falkenstein identified the need to diversify into new service offerings and opted to start acquiring companies. Since then, Falkenstein has acquired six businesses, aligning with their overall focus of enhancing lives through healthy living and healthy homes.


Just Life Group is a publicly-traded company with a current market cap of $46.799M as of June 9, 2022.


In the latest installment of our Inside The Mind of An Acquirer series on Built To Sell Radio, we interview Falkenstein on how he thinks about acquiring companies.


In this episode you’ll learn how to:

  • Attract an acquirer without approaching them directly.

  • Negotiate the highest multiple for your company.

  • Impress an acquirer the first time you meet them with one simple trick.

  • Leverage financial modeling to convince an acquirer to pay a higher multiple.

  • Create a bidding war for your company.


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More About Tony Falkenstein

Tony Falkenstein ONZM is the Founder and Chief Executive of Just Life Group Ltd. He was instrumental in launching New Zealand’s first Business High School, at Onehunga High in 2001, resulting in business being added into the New Zealand curriculum.


Tony was inducted into the New Zealand Business Hall of Fame in 2008, and in 2010 was appointed as an Officer of the New Zealand Order of Merit (ONZM). In 2012 Tony received the Award for New Thinking in the World Class New Zealand Awards, in 2013 he was appointed a Distinguished Alumnus of the University of Auckland, and in 2014 he received the Alpha, Beta, Gamma distinction.


Definitions

Accretive:

By definition, in corporate finance, accretive acquisitions of assets or businesses must ultimately add more value to a company, than the expenditures associated with the acquisition. This can be due to the fact that the newly-acquired assets in question are purchased at a discount to their perceived current market value, or if the assets are expected to grow, as a direct result of the transaction. Source.


Confidential Information Memorandum (CIM):

A confidential information memorandum is a document prepared by a company in an effort to solicit indications of interest from potential buyers. The CIM is prepared early on in the sell-side process in conjunction with the seller’s investment banker to provide potential buyers with an overview of the company for pursuing an acquisition. The CIM is designed to put the selling company in the best possible light and provide buyers with a framework for performing preliminary due diligence. Source.


Re-Trading:

Re-trading is the practice of renegotiating the deal price of a company after the initial price and terms have been agreed to. This occurs when the buyer performs due diligence during negotiations and potential risks are uncovered during the process. Source.


Majority Recapitalization:

A majority recapitalization is a transaction whereby a business owner(s) sells a majority interest in the company to an investor to raise cash while maintaining a significant minority ownership stake and continuing to manage the recapitalized business. Source.


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