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Talking M&A: The Carve-outs Landscape with Baker McKenzie

By Deal Contributors
Published: July 7th, 2022
Baker McKenzie partners Steven Canner and Darcy Down sit down to discuss the complexities of carve-out transactions, why more companies are considering them and how to make sure they are executed smoothly. Sponsored

In the first episode of The Deal’s Talking M&A podcast, Baker McKenzie LLP partners Steven Canner and Darcy Down walked through the ins and outs of carve-out transactions, what companies must consider before enacting such a deal and why carve-out deals are more complex and more intricate than ever before.

During the podcast, Down and Canner discussed the nature of carve-out transactions, what type of carve-outs exist and the motivations of a company when implementing such transactions.

Canner explained the need for proper preparation and highlighted some key drivers for carve-outs, such as activist investors or shareholders selling out of their stocks. He talked about how a company must prepare for carve-outs from a legal perspective to help ensure trade secrets and sensitive information are not divulged to the wrong parties.

Each asset may command a different set of buyers, and companies must be prepared for parties of all shapes and sizes and the nuances that come with each, Canner said. As the pool of parties interested in a business grows, the importance of keeping information inside the boardroom moves up the chain, he said, explaining some of the ways to make sure corporations limit leaks.

Down, meanwhile, emphasized the need for all parties to understand how the business that is due to be carved out will operate as a separate entity. What support that business may need, as well as how other business units may be affected by the sale of another, are just a few options to consider, she said.

As in any deal, there are potential pitfalls to carve-outs, Down said, and companies must be cognizant of those issues. The discussion also crossed into the intricacies of cross-border deals, as the importance of structuring a deal correctly with consideration of any tax and legal implications in different jurisdictions is of the highest importance.

As for the future of the deal type, with technology advancing at a remarkable clip, economic shifts potentially on the horizon and more emboldened shareholder bases, carve-out deals are here to stay, and companies must be prepared when the option does arise, Canner said.

Here’s the podcast with Steven Canner and Darcy Down:

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Editor’s Note: This podcast was sponsored by Baker McKenzie.

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