Bass, Berry & Sims attorney Frank Pellegrino authored an article for Industry Today exploring the challenges and opportunities in the current mergers & acquisitions (M&A) environment in the manufacturing sector. As Frank points out, factors such as inflation, trade policies, supply chain uncertainty and more have impacted and complicated M&A executions.
In the article, Frank outlines several key issues that manufacturers should consider in order to navigate today’s M&A market:
- A disciplined, well-prepared deal process remains essential as buyers and lenders are more demanding than ever.
- The inflationary environment also invites consideration of purchase-price adjustments tied to working capital or inventory fluctuations.
- Seller financing is also returning as a potential financing option in the current M&A environment.
- Earn-outs have regained prominence, allowing the parties to bridge valuation gaps attributable to short-term dislocations.
- Another structuring lever lies in managing closing conditions and the “outside date” in the definitive agreement.
- Tax planning remains integral to structuring.
- Current threats of tariffs and the potential for renewed trade barriers add another layer of complexity.
Frank ends by stating, “Sellers should move deliberately to market while structuring deals with protections that manage risk and preserve upside. Success depends on preparation, realistic valuations, and creative structuring to balance liquidity, tax, and stability—even amid higher rates, persistent inflation, and evolving trade policy.”
The full article, “Challenges and Opportunities in Today’s M&A Environment,” was published by Industry Today on June 9 and is available online.