Posted: May 15th, 2016

Analyze all the deal structures: i.e. mergers, asset purchase and stock purchase in the light of the consideration provided by CEO and provide explanations why each structure should/should not be chosen.

Question:
You are a market analyst at one of the biggest biscuit manufactures of the country – BizQuit Corp. One day you hear BizQuit approaches Creamy Dreamy Inc- a large ice-cream maker with the hope to combine and Creamy Dreamy board gives a positive response, also thinking that there are lots of synergies out there for 2 businesses to exploit. CreamyDreamy is a corporation privately held by 5 shareholders.
a)    The CEO of the company calls you up and tells you the following: “As you know we are preparing to buy CreamyDreamy. I want you to think of the best deal structure in the light of the following: I do not want to bother with many legal documentation, agreements and stuff: pick the simplest possible structure. Also note that, I was told by our lawyer that they are subject to some contentious lawsuits. We definitely do not want to be exposed to those liabilities or assume them. Is there a way we could exclude only those liabilities? Lastly, the lawyer also told that Creamy Dreamy have very essential contractors under which they cannot transfer the contract rights to any third parties”.
Analyze all the deal structures: i.e. mergers, asset purchase and stock purchase in the light of the consideration provided by CEO and provide explanations why each structure should/should not be chosen.