Mergers and acquisitions are not simple. First, there are opening negotiations, which are followed by legal to-and-fros that can go on for months.
It takes a long time, it’s expensive, and it can often become an unsavoury process if drawn out and complicated.
Plus, most of them fail anyway. Studies suggest that over half of M&A deals are “unsuccessful”.
That’s no good when an array of advisors for high-cost services is more or less mandatory for any medium-to-large size deal.
So hiring an expensive team of corporate lawyers does not guarantee a successful acquisition.
Often both sides will also have to make concessions in order to get a deal through, which isn’t always in the best interests of all parties involved.
Can blockchain change how we conduct M&A’s?
Businesses will seriously look at expanding their operations by acquiring other companies or purchasing intellectual property and assets if the initial cost barrier is removed.
It would not only reduce the risk of such ventures, but makes the market far more accessible for smaller companies who did not have the resources before.
M&A fees seem to come at every stage in the process.
There are even fees when a deal doesn’t go through: termination fees are paid to compensate for the time, effort, and expenses incurred by a party when a deal is not completed.
Any fallout from a bad or uncompleted deal can be fatal for a small-to-medium size company. While a large company usually has enough management experience and financial clout to recover, mid-market businesses sometimes lack the resources to just absorb it.
The stakes are much, much higher.
So what if it were possible to verify the purchase of a company or IP automatically? And so seamlessly that the deal completes up to four times faster?
Smart Contract Technology
Smart contracts are able to finalise an agreement once certain conditions have been fulfilled, which creates a ‘trustless’ system that removes the need for both parties to be sure of the others’ intentions.
Blockchain makes it so that only when each specific condition laid out in the contract is met, the deal can be finalised.
This also means that M&A deals could be completed at about a quarter of the cost. Moving to a transparent, secure, and immutable smart contract process removes any need for teams of advisors who often take upfront fees before anything even happens.
Not to mention the costs of a retainer, and all the rest of it.
Blockchain gives power back to the community
LEXIT allows entrepreneurs to do anything with their assets—from the trade of intellectual property, copyrights and technology to the sale of entire companies.
The blockchain-powered tokenisation model, and the native token of LXT, combine to encourage a streamlined merger and acquisition process. It is as easy as shopping and selling online.
The marketplace provides potential M&A’s with a network of independent experts, or ‘assessors’, who arbitrate each transaction and help to provide objective valuations.
By distributing the process, LEXIT helps to ensure that both sides have the best chance of a fairer, better informed and more lucrative deal.