3 Facts About Ownership Transition Deal Structures

The Deal Structure including dollars, timing, terms, legal entities, taxes, and contractual documents is the most tangible part of the transaction. The Deal Structure WILL NOT...

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3 Facts About Ownership Transition Deal Structures. The Deal Structure including dollars, timing, terms, legal entities, taxes, and contractual documents is the most tangible part of the transaction. The Deal Structure WILL NOT…  (1) Substantially create capital or cash flow. The business must generate cash and be capital efficient post-transaction. (2) Create desire, discipline, or competencies in the management team. (3) Work without trust between all stakeholder groups and people.

The deal structure itself is extremely critical and is the thing that must come together immediately before the transaction is completed. This is where a lot of the focus goes including from the many third party advisors like CPAs, attorneys, and investment bankers.

If it were to be related to a construction project, this is the equivalent of the later stages of design-development (DD) and construction documents (CD).

Like a construction process, what really matters is how effectively the project is built including quality, cost, and schedule, and will it serve the needs of the project owner.

Our focus is ensuring that all parties go into the DD/CD phases well prepared so that the construction and operations phases provide the results everyone was looking for. 

Deal Structure WILL NOT...

  1. Substantially create capital or cash flow. The business must generate cash and be capital efficient post-transaction.

  2. Create desire, discipline, or capabilities in the management team. These must be developed and exist pre-transaction.

  3. Work without trust between all stakeholder groups and people, especially the primary three groups.

In architectural phases, these can best be described as the Programming and Schematic phases where requirements are determined and models are created to see if everything pencils out. It is only within this context that effective projects are built. 

Please contact us to talk through your specific situation and our approach. 


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3 Facts About Ownership Transition Deal Structures
The Deal Structure including dollars, timing, terms, legal entities, taxes, and contractual documents is the most tangible part of the transaction. The Deal Structure WILL NOT do three very critical things - Cash, Capabilities, and Trust.