You are a consultant hired by a medium sized company with 20 employees and a not much cash. Although the company has over 30 years of profitable operations, they express interest in buying one of their component suppliers. The component supplier is roughly the same size of the company, has about the same number of employees, but has a little more cash on hand. Further, the component supplier is a family operated business with two shareholders that would like to become managers after acquisition.
Explain what you would discuss with your client during the initial due diligence meeting. What would you tell them about a potential deal structure? Additionally, which would you recommend—a merger or a consolidation? Why ?
