Congratulations, you have a buyer interested in your business. When you receive the term sheet, you may find that the proceeds are primarily in stock or mix of stock and cash, which leaves you wondering if the offer is “market” and how you should evaluate the term sheet. In Allied Advisers analysis of 7K+ deals done in the last 5 years globally and stock has been a consideration in ~30% of transactions. We expect the use of stock to increase even more for M&A given the growth of highly valued private companies. While cash is easy to value given the intrinsic value and immediate liquidity, stock has several nuances to consider. The article covers considerations to evaluate a term sheet when the proceeds are in stock or mix of stock and cash.
