Another very important aspect in a M&A process. Top management (nowadays very often includes the founder/s of the target company, the masterminds behind the successful business venture) may sell the company (at a premium) or deter potential investors.

Generally, management presentations to investors and their advisers will be considered disclosures (disclosed facts) against the representations and warranties set out in the transaction agreement. Subject to the applicable standards of disclosure e.g. completeness, fairness, clarity, specificity etc. It is thus in the best interest of the vendors/sellers and the management, each management presentation to address adequately (in sufficient detail, without volunteering additional information, advice or opinions such as analysis of potential implications and suggestions for solutions – that’s the job of the bidders’ advisers!) potential red flag issues that may serve as grounds for warranty claims.

Naturally, prior to a presentation, the management will have been prescreened and assessed by the potential investors by various means: publicly available information (social networks, publications, industry awareness and reputation etc.), informal feedback from peers, customers, consultants and other connections…

Additionally, an appearance of structure, clarity and neatness will matter a lot: how the relationship between a manager and the company has been structured, managed and documented? Are there management agreements in place (containing the market standard terms plus sector/company specific terms)? Are the incentives (bonusses, option plans etc.) clearly stated and subject to measurable objectives and key results? Are there other side agreements between the manager and the company e.g. loans, security for loans, consultancy, services agreements, agreements relating to IPRs – copyrights, trademarks, etc.?

And then comes the presentation or a series of presentations. The objectives of the presenting management essentially include: (a) reinforce or introduce disclosures and (b) respond to the bidder’s satisfaction to concerns identified and raised during the meeting. Asking for additional time to respond is totally acceptable (but must be followed up in a timely manner). But avoiding questions and failing to commit to provide an answer within a reasonable term will likely be viewed as red flags. Hence may delay conclusion of due diligence until the issue(s) has been further investigated and factored in the final offer. Participation, guidance and support by the seller’s legal counsel will often be good value for money. Bidders’ lawyers will certainly be present and ask questions with potential legal implications. It is a part of the ritual and at the end of the day will contribute to the overall post-presentation impression in the minds of the investors present at the meeting.

There is often a third objective: (c) demonstrate the top management’s competence and excellence – clearly the target business has been thriving under the leadership and vision of those managers/founders. In all likelihood they will have the knowledge, experience and expertise to find and implement the best market solutions possible and their statements made at the presentation would be considered authoritative and reliable. The investors may well consider retaining the services of the top management to ensure an efficient and timely integration and the continued growth.