Mergers and Acquisitions and Investment Banking – Jeffrey Maddox

Jeffrey Maddox

June 29, 2022

Mergers and Acquisitions and Investment Banking - Jeffrey Maddox

According to Jeffrey Maddox, Michael J. McLaughlin has almost 30 years of experience in mergers and acquisitions, investment banking, corporate valuation, and related areas. He also has specializations in the energy, natural resources, and infrastructure sectors. Prior to joining KPMG, he worked at Wheat First Butcher Singer and Mercantile Bank. He holds a B.A. from the University of North Carolina, Chapel Hill.

Process of M&A transactions

M&A transactions are often the result of mergers and acquisitions. During this process, the buyer will evaluate the market for potential targets and determine what the best price would be for that target company. In addition, the buyer will also try to determine if there are any synergies that could be gained from the transaction, such as reduced costs or increased market power. The buyer will also make various offers to the target company’s shareholders.

M&A transactions are typically mid-market transactions where the leaving owner will retain a minority stake in the company. By doing this, the acquiring entity can leverage the owner’s expertise and cooperation. Equity retention is typically ten to thirty percent. It gives the existing owner an incentive to drive the value of the company up. In some cases, holding a minority stake is even more valuable than owning 100% of the business.

Relationship between buyers and sellers – Jeffrey Maddox

Jeffrey Maddox explained that, there are two main types of buyers in the mergers and acquisitions industry: financial and strategic. A financial buyer is more interested in purchasing a company’s assets. A strategic buyer has a longer-term vision of how to develop the company’s assets and operations. This difference in mindset between the two types of buyers makes them attractive to sellers seeking partial exits or to remain in some capacity after the transaction.

A targeted deal is a negotiation between a buyer and a seller. In a targeted deal, the buyer seeks to lock up the transaction by providing the seller with an exclusivity period (also called a “standstill” or “no shop” period) to perform due diligence, secure financing, and evaluate competing offers. A seller may resist granting the buyer exclusivity, but this is not uncommon in significant or complex transactions.

Fee precedents

Few business brokers or M&A advisors publish their fees online. In fact, sell-side investment bankers rarely do so either. That’s partly because no two transactions are identical. Likewise, engagement fees and back-end fees may vary widely. Example fees means to give investors a sense of typical fees, not to discourage prospective clients from contacting investment banks. But too much transparency hurts investment banks in the long run, and it may also make it difficult for them to negotiate fees with potential clients.

In contrast, this article identifies several key differences between the roles of investment banking advisors and fiduciaries. Although fiduciary duty and contract law are interrelated, the governing principle of “duty of care” requires investment bankers to act in the best interests of their clients. This means directors have a greater responsibility to oversee the conduct of M&A advisors. However, deterrence theory may impose liability on economic principals if they do not supervise their agents.

Exit options for M&A bankers – Jeffrey Maddox

In addition to Jeffrey Maddox, there are many ways to exit from mergers and acquisitions, including selling your business to another company. This is an attractive option for startups because it allows you to gain a broader geographical footprint, eliminate competition, or acquire talent, infrastructure, or a product or service. In addition to obtaining liquidity, exiting this way means that you can continue to run your business as usual, while retaining control over price negotiations.

If you’re a junior or mid-level banker, you might consider a position in corporate finance. While this work is less glamorous and less lucrative than investment banking, it will allow you to reclaim your work-life balance. You may not be involved in big deals, but you’ll be working in a smaller team. For those looking for a better work-life balance, corporate finance is a great fit.