Transaction complexity in corporate deals

We're all familiar with Commercial transactions from our everyday experience, and a good number of these concepts translate over to corporate transactions (buying and selling of companies and complex assets). There are 3 aspects of the transaction itself that are dramatically more complex in a Corporate deal:

• Buyer Funds Mix: Buying a Company involves moving substantial funds, which may come from more than one source and typically includes some financing complexity
• Price Opacity: Company financials (assets and liabilities) change moment to moment, and buyer’s price includes accommodation for the different ways a Company’s value might change by the time it changes hands
• Seller Structure: Companies being sold typically have multiple owners, often with different classes of ownership created over the years. Each Owner (however small their ownership) is entitled to their earnings from the deal through the Securities they hold even as the buyer and seller negotiate on all the terms at a high level.

Today the approach to this highly nuanced, interconnected, and iterative mathematics is to hire one or more financial analysts for each transaction over its duration (months) to constantly develop, update, and share Excel models of the waterfall distributions to all parties on the deal.

As Corporate Transactions are full of major decisions, and a key aspect of truly aligning on a decision is to see its impact in dollars and cents — thus, agreements on legal and business terms are routinely reflected in the Waterfall model to keep all parties on the same page.

Merger Waterfall helps the legal team in visualizing impact and distributions, ensures all stakeholders are on the same page, and drives quick and clear-eyed decision making.