Myth #6 - Special Purchasers (those who perceive they will achieve synergies) will not pay more than another purchaser even if they expect to receive significant post-acquisition benefits.
Theoretically, if there is only one special purchaser, he or she should pay an amount only marginally greater than that offered by the highest non-special purchaser.
Our experience suggests that:
- There is usually more than one special purchaser and they will try and out-bid each other.
- There are different types of special purchasers. A special purchaser can be a synergistic industry participant, a wealthy entrepreneurial individual, or a minority shareholder who for various reasons (economic and non-economic), is motivated to purchase the company.
Therefore, there could well be an array of special purchasers, and this, based on our experience has resulted in the occasional bidding war.
The fact is that many of our transactions involve special purchasers which we define as a purchaser who perceives that they will gain post-acquisition benefits – both economic and psychological. It has been our experience that these purchasers are prepared to pay more and become very competitive with their offers.