Welcome to M&A: Sell-Side Transactions: the seller-side banker's playbook for engineering a sale of a company, a division, or a corporate parent's stake in a subsidiary.
Exam Weight: Part of 24% / 18 items (Function 3). M&A sell-side workstreams (engagement, structuring, marketing, bid management, fairness, hand-off to legal) anchor a significant portion of the Function 3 items.
Video Resources
What You'll Learn
In this unit, you'll cover:
- M&A Engagement and Strategic Alternatives Setup: The engagement letter between the seller and the bank, and the menu of sale variants (entire company, divestiture, spinoff, split-off)
- Transaction Structures: Stock sale vs asset sale, merger vs tender offer, and the seller's banker's role in advising on each
- Tax Coordination: Tax-free reorganizations under the reorganization rules, the §338(h)(10) joint election, the golden-parachute excise-tax provision, and the executive compensation deduction limit
- Antitrust Coordination and Hart-Scott-Rodino (HSR): Premerger notification thresholds, waiting periods, the 2026 fee tiers, and cross-border coordination with the Committee on Foreign Investment in the United States (CFIUS)
- Other Corporate Issues: Existing equity and debt securities, change-of-control puts, conversion features, the Worker Adjustment and Retraining Notification Act (WARN Act), and shareholder objectives
- Seller's Valuation Analysis and Buyer Analysis: The comprehensive valuation report and the extensive analysis of potential buyers
- Marketing the Transaction: The teaser, confidentiality agreement (NDA), confidential information memorandum (CIM), and bidding procedures letter
- Stapled Financing: The pre-arranged debt-financing package offered by the seller's banker, its benefits, and its conflict-of-interest profile
- Management of the Bidding Process: Indications of Interest (IOIs), data room sessions, site visits, and response to additional information requests
- Buyer Proposal Evaluation: Currency strength, accretion/dilution analysis, synergies, and social issues
- Final Round Procedures and Bid Selection: Final round procedure letters, draft definitive-agreement markup, and the IOI vs Letter of Intent (LOI) distinction
- Execution Hand-Off: Hand-off from banker-led auction to legal-led definitive-agreement negotiation, including the fairness opinion role
- Revlon Background: The Delaware common-law fiduciary duty that frames the seller-board's process (background only)
Why This Matters
Function 3 is the M&A, tender offers, and restructuring function (24% of the scored exam). Sell-side process is the most testable workstream within M&A because it has the densest sequencing logic. The exam writes questions that pair a deal stage with a document, a process step, or a regulatory trigger:
- A buyer signs the NDA but has not yet received the CIM
- A bidder submits an IOI with a valuation range and no financing commitment
- The seller's banker is asked whether stapled financing creates a conflict
- Cash tender offer hits the HSR waiting period
- A target's S-corp seller asks about the §338(h)(10) election
Each fact has a specific document, process step, or rule attached to it.
The process timeline is the organizing concept. Once you can place an activity (NDA execution, CIM delivery, IOI receipt, round 2 launch, LOI selection, exclusivity grant, definitive-agreement signing) in its correct sequence, you can derive the question's answer. Every other concept in this unit (tax structures, antitrust thresholds, stapled financing, valuation analysis) layers on top of that timeline.
Let's start with the engagement and strategic-alternatives setup: how the seller hires the banker and what sale variants get put on the table.