Situation

Your company decides to sell a plant, but needs the products manufactured there and, therefore, needs a supply agreement with the buyer. A competitor may be the best candidate to buy the plant and become your supplier. The potential buyer, however, needs information about plant operations and cost of goods to submit a proposal to purchase. Your CEO wants to make a deal, but your antitrust lawyer tells you not to disclose this information and the plant manager is worried about sharing sensitive information.

Challenge

  • Finding a solution that complies with antitrust laws while allowing both sides to have the information needed to analyze and make financial proposals. 
  • Protecting proprietary business information. 
  • Providing potential buyer with sufficient information to submit an aggressive financial proposal.

Action and Approach 

  • Encourage antitrust counsel to consider precisely which information cannot be shared and to determine the stages of negotiation at which more information can be shared. 
  • Encourage key business managers to consider what aspects of the information are really proprietary and need to be kept confidential and what aspects can be shared without undue risk to the business. 
  • Understand and appreciate the limits and requirements of the potential buyer. 
  • Help business and legal develop a multi-step solution to provide information throughout the negotiation process. 
  • Use common sense and be sure exchange of information is reasonably required to accomplish the expressed goal.

Implementation 

  • Question and dissect the requested information to determine what really cannot be shared versus what aspects can be shared. 
  • Obtain guidance from antitrust counsel to navigate and answer difficult questions so that information a buyer would need can be shared. 
  • Communicate limitations and sensitivities to buyer. 
  • Encourage dialogue to direct buyer to other means of developing key information. 
  • Be sure to share information with specific people at the buyer who need to know.

Process 

  • Provide information in a multi-step process that continues through negotiation and to signing. 
  • Provide more information when number of potential buyers is reduced. 
  • Provide full disclosure at a predetermined number of days or hours in advance of signing with specifically tailored outs for buyer. 
  • Include contractual provisions to address a lack of information: pass through of pricing aspects that cannot be shared; seller of plant acting as buyer’s agent with respect to raw materials to be used in manufacture of the product. 
  • Share information through outside counsel or independent advisors. 
  • Determine if a deal with the identified buyer/supplier is really feasible. 
  • Utilize an agreed upon financial model to determine values using inputs supplied by an independent third party.

Measure effectiveness 

  • Maintain progress and pace of transaction. 
  • Complete a transaction acceptable to both sides. 
  • Maximize efficiency and obtain appropriate financial terms.