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After a high-water mark in 2021, a year when buyers often needed to find ways to sweeten their bids in a very competitive M&A landscape, RWI has been purchased on fewer deals each year. A few years later, deal parties are experiencing the effects of lax diligence (e.g., 2] Not all M&A deals are a good candidate for RWI.
Trading volume for baby bonds is generally thin, so the bid-ask spread -- the difference between the asking price and the offering bid -- may be wider compared to more heavily traded securities. Consider talking with a tax professional, and be mindful of how these taxes could impact your overall returns on investment.
Out of those 12 potential buyers, the highest bid came from a private equity firm (a financial buyer) , not a strategic buyer. They chose a strategic buyer that knew the ins and outs of the business and did a significant amount of duediligence before submitting their LOI. But the SunPro/Peakstone team didnt take that offer.
In terms of value, the inflated bids resulting from the blind auction process that included unrealistic buyers don't represent a meaningful proxy for real valuation and neither do the stand-alone price targets coming from research firms pandering to the arts. And what more do you need to complete in terms of duediligence or design.
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