It should come as no surprise that executives are fairly sensitive when it comes to topics of reporting structure and titles. Prior to a merger, you have two separate management teams (with two separate cultures), and in order to merge, you have to agree on who is going to do what, and what each executive’s new title will be. At the end of the day, structure is not a show stopper, but it creates a very high bar for consideration – you have to really want to make it happen to be able to sit down and sort through the complexity. There are numerous techniques for bringing together two such structures, but none of them are remotely elegant, and they all involve spending many, many hours with lawyers. Even melding two separate option programs can be challenging. But institutional investors are loath to give up previously negotiated rights, and this can be especially true when the investor in a competitive company is the one bringing the request. Finding a way to meld two complex capital structures is non-trivial, and may require compromise from many parties involved. There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. Private companies typically have capitalization structures that are very complex. There are many reasons why private-private is so difficult, but allow me to highlight three specific challenges that seem quite prevalent. Public-public, and public-private are actually much easier to consummate. And of course, we are afforded the advantage of greater scale.ĭespite that there may be many obvious reasons for any two companies to combine, most private-private mergers (where both companies are private entities) never come to fruition. There are many synergies – different geographic strengths, different core customer bases, and different product strengths. As Benchmark is a large institutional investor in Grubhub, we were actively involved in the merger process, and we are quite excited about the potential of the two companies coming together. Today, Seamless and Grubhub announced the signing of a definitive agreement to merge two of the nation’s premier services for ordering takeout online.
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