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The Excel file below includes details on 4163 M&A transactions globally for the month of April 2026

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If you’re an investor, analyst, or M&A professional, this deal has something for everyone: activist dynamics, defensive M&A, contested proxy filings, governance questions, and a legitimately uncertain outcome leading causing an interesting investor arbitrage (special) situation.

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Who Are the Parties?

Forager Capital Management is a Birmingham, Alabama-based investment firm run by Managing Partner Edward Kissel. Forager has followed Repay since its IPO and has quietly built a ~13% stake in the company to become the single largest shareholder of record. The firm is not a passive investor. It recently completed the acquisition of Quipt Home Medical, a publicly listed company, for approximately $260 million. They have the financial firepower and transactional experience to close a deal of this nature.

Repay Holdings Corporation (NASDAQ: RPAY) is an Atlanta-based fintech company that provides vertically-integrated payment processing solutions with niche focus on healthcare, personal lending, automotive and consumer finance. The company’s platform supports payments across digital wallets, ACH, credit/debit cards, and electronic checks. Repay went public via SPAC in 2019 and has grown through a series of acquisitions. It currently has approximately 85.9 million shares of Class A common stock outstanding, with a market capitalization of roughly $333 million as of this week (early May 2026).

The Deal Timeline: A Rapid Escalation

This situation went from private outreach to public proxy fight in under three weeks. Here’s the sequence:

April 13, 2026: Forager contacts Repay management (John Morris, CEO; Rob Houser, CFO; Stewart Grisante, General Counsel) to request a “preliminary, exploratory discussion” about a potential acquisition. Forager explicitly noted it had not yet formed a definitive plan or proposal.

April 14, 2026 (within 24 hours): Without any substantive dialogue, Repay’s Board adopts a shareholder rights plan (a “poison pill”), effective immediately and running through April 2027. The plan triggers if any holder acquires 12.5% or more of outstanding Class A common stock. This threshold was clearly calibrated to box out Forager, which already sits at ~12.9%. Forager described the board’s speed as “difficult to reconcile with a genuine commitment to maximizing shareholder value.”

April 17, 2026: Forager goes public. It files an amended Schedule 13D/A with the SEC and releases a formal letter to the board proposing to acquire 100% of Repay’s outstanding shares at $4.80 per share in all-cash. This represents a 75% premium to the stock’s 30-day volume-weighted average price of $2.75. The total enterprise value, including debt, is approximately $1 billion. The same day, Repay confirms receipt of the proposal and states the board will review it with financial and legal advisors (J.P. Morgan Securities and Sullivan & Cromwell LLP).

April 28, 2026: Ten days have passed. No engagement. Forager issues a public statement expressing concern that the board’s only responses have been to adopt a poison pill and issue a preliminary earnings release. Forager says these actions “raise questions about whether the appropriate focus is being placed on evaluating a compelling proposal versus implementing defensive measures.”

May 1, 2026: Repay files a Preliminary Contested Proxy Statement (PREC14A) with the SEC, signaling that a formal proxy fight is now on the table. In the same filing, the board denied a separate request from Veradace Partners (an 8.4% stockholder) to waive bylaw timing requirements for director nominations, ruling that Veradace failed to comply with required procedures.

May 4, 2026 (Q1 Earnings Call): In what was a highly charged call, Repay CEO John Morris and CFO Rob Houser did not take questions on the Forager proposal. Management confirmed the board had unanimously rejected the $4.80 offer, characterizing it as one that “significantly undervalues the company” and is “not in shareholders’ best interest.” That same day, Forager issues yet another public statement noting that 17 days had elapsed without any substantive communication whatsoever from the board or its advisors.

The Valuation Question: Is $4.80 Really “Significantly Undervaluing” Repay?

Forager’s Case

At $4.80 per share, Forager’s offer represents a 75% premium to the 30-day VWAP at the time of the proposal. In a year where take-private premiums have averaged well below 40%, this is an aggressive bid. Forager has pointed out that this premium is “among the highest observed in announced take-private transactions this year.” The offer provides immediate, certain, all-cash value in an environment where RPAY has been trading in the $2.50–$3.50 range for much of the past year.

Repay’s Case

The board isn’t wrong that there’s a credible bull case above $4.80. Here’s the math the board is likely pointing to:

• DA Davidson maintains a Buy rating on RPAY with a price target of $8.00 per share, reflecting the strategic value of the pending Kubra acquisition and REPAY’s growth trajectory toward double-digit revenue growth.

• InvestingPro’s Fair Value estimate places RPAY at approximately $5.82 per share, suggesting the $4.80 offer does represent a discount to intrinsic value under more optimistic assumptions.

• Analyst price targets range from $3.50 to $10.00, reflecting genuine uncertainty about execution on Kubra and longer-term growth potential.

• Q1 2026 adjusted EBITDA margins of ~43% and full-year guidance of $340M–$346M in revenue (+10–12% YoY) suggest a business with real profitability discipline.

The crux of the disagreement is whether you trust management’s ability to close and integrate Kubra, deleverage the balance sheet, and actually achieve double-digit revenue growth. If you do, $4.80 is a lowball offer. If you’re skeptical then $4.80 looks like a good deal.

The Kubra Wildcard

Overlaying all of this is Repay’s announced acquisition of Kubra Data Transfer for $372 million. This would roughly double Repay’s total revenue by adding a bill presentment and payment processing platform serving utility companies and government agencies. Management has been emphatic that Kubra is the company’s most compelling long-term value creation opportunity, offering interaction with over 40% of US and Canadian households monthly.

But Kubra has attracted vocal opposition from Veradace Partners, which owns 8.4% of Repay and publicly objected to the acquisition on April 9. Veradace cites poor capital allocation, elevated leverage risk, governance failures and a sharp stock selloff following the announcement. Veradace wants the Kubra deal terminated and two board seats.

The board denied Veradace’s director nomination request on procedural grounds, which itself raises governance questions. Repay’s filing of a preliminary contested proxy statement on May 1 suggests management is prepared to fight on two simultaneous fronts: defending the Kubra deal and rebuffing Forager’s acquisition proposal.

From a strategic standpoint, completing Kubra would substantially change Repay’s risk/valuation profile, likely making the $4.80 bid a non-starter for shareholders (assuming the integration goes smoothly).

Repay’s Q1 Financials: Context for the Bid

Here’s where RPAY stands operationally, which directly informs whether the board’s confidence in rejecting $4.80 is well-founded:

• Q1 2026 Revenue: $80.8 million (+4% YoY) which slightly missed estimates

• Adjusted EBITDA: $34.4 million (~43% margin)

• Adjusted EPS: $0.22/share (beat estimates by $0.01)

• Business Payments growth: +18% YoY (the standout

• Consumer Payments growth: +4% YoY

• FY2026 Revenue Guidance: $340M–$346M (+10%–12%)

• FY2026 Adjusted EBITDA Margin: ~42%

• Free Cash Flow (Q1): $5.4 million (16% conversion; weighed by one-time items including debt refinancing)

One notable item: Repay refinanced its maturing 2026 convertible notes using $37M in cash and a $110M revolving credit draw in Q1 which tightens near-term liquidity even as management touts financial strength. The debt picture will only get more complicated post-Kubra, with the company targeting a return to below 3x net leverage within 18 months of closing.

The Current Share Price and What the Market Is Telling Us

As of this writing (May 6, 2026), RPAY is trading around $4.00–$4.11 per share — approximately 15–17% below the Forager bid price of $4.80. The stock surged approximately 27% on April 17 when the Forager offer became public (from mid-$3s), and has since settled back as the board’s defensive posture became clear and the Q1 earnings call left investors without a clear resolution.

The market-implied probability of the deal closing at $4.80 (based on the ~$0.70–$0.80 spread) is roughly 25–35%, which reflects the market’s view that there is a meaningful but not dominant chance this deal gets done at current terms. The spread also prices in some probability of a sweetened offer.

Insights for Investors

Arb opportunity, but not risk-free. The ~17% spread to the offer price offers a meaningful return if the deal closes, but RPAY traded at $2.50–$2.75 before Forager appeared. If this falls apart entirely, there’s real downside risk especially if Kubra closes at a high leverage ratio and execution risks materialize.

Watch the shareholder registry. With Forager at ~13% and Veradace at ~8.4%, approximately 21% of shares are controlled by institutional activists who either want a sale or major strategic changes. This is a large enough block to create serious pressure on management going into the annual meeting.

The poison pill expiration matters. The rights plan runs until April 2027. This limits Forager’s ability to accumulate further shares in the open market without triggering dilution for other stockholders. But it doesn’t prevent a proxy fight or a tender offer. Expect Forager’s next move may be to go directly to shareholders via a tender.

Kubra is the swing factor. If the Kubra deal closes cleanly in Q2 2026 as expected, the board’s argument that $4.80 undervalues the company becomes more credible. If Kubra hits a snag, Forager’s offer starts looking more attractive to all holders.

Insights for M&A Professionals

This situation illustrates several dynamics that make this an excellent M&A cast study.

The “poison pill within 24 hours” problem. Repay’s lightning-fast poison pill adoption, well before any formal proposal was even made, is legally defensible but optics-damaging. It signals entrenched management rather than a good-faith deliberative process. Expect shareholder advisory firms like ISS and Glass Lewis to scrutinize this closely.

Defensive M&A as a “just say no” strategy. Using the Kubra acquisition to claim a higher standalone value (while simultaneously piling on debt) is a classic defensive M&A playbook. It’s a legitimate strategy, but it creates execution risk and, if Kubra underperforms, significant board liability.

The dual-activist dynamic. Both Forager (pro-acquisition) and Veradace (anti-Kubra) are pressuring management from different angles simultaneously. This is rare and destabilizing for incumbent boards. Management must choose: engage with Forager and risk legitimizing the offer, or continue ignoring both activists and risk losing the proxy vote.

Proxy contest mechanics. The PREC14A filing means Repay has drawn first blood in the proxy war. Forager could respond by nominating its own slate of directors that would force shareholders to choose between the incumbent board and Forager-backed nominees. Given Forager’s 13% stake, it would need to win over approximately 38–40% of remaining holders to achieve a majority. While tough, this is not impossible especially given that they can likely count on Veradace’s support (8% of the shares).

Will This Deal Close? Our Take

Here are the three scenarios, ranked by probability:

Scenario 1: Sweetened Offer / Negotiated Deal (40% probability)

The most likely resolution is a negotiated transaction at a price somewhere above $4.80. The board has unanimously rejected $4.80, but that’s a negotiating position. M&A deals often involve early rejections. Forager has demonstrated financial capacity and deal-closing credibility. If Kubra faces regulatory delays, Forager raises its bid to the $5.25–$5.75 range, and activist pressure continues to build, the board may be compelled to engage. This is the scenario where shareholders win big.

Scenario 2: Deal Falls Apart / Repay Remains Independent (35% probability)

If Kubra closes cleanly, the board has a credible narrative: “We were right to reject $4.80. Look at our combined revenue base now.” Under this scenario, Forager eventually reduces its stake or accepts minority investor status, and RPAY attempts to execute on its post-Kubra strategic plan. The risk here for shareholders is that Repay’s stock returns to pre-bid levels ($2.50–$3.00) if execution disappoints. For investors currently holding at $4.00+, this would be a painful outcome.

Scenario 3: Proxy Fight / “Hostile” Shareholder Vote (25% probability)

If the board continues to stonewall and refuses to engage, Forager may escalate to a tender offer directly to shareholders, or file its own proxy to replace board members. With ~21% of the float controlled by activists (Forager + Veradace, who want different outcomes but both want change), a contested vote is a real possibility. A successful proxy could ultimately lead to a new board that is more receptive to a deal. Notably, in Delaware law (where Repay is incorporated), a determined acquirer with sufficient shareholder support can ultimately prevail even against poison pills.

Our Verdict: The terms will be sweetened, but not immediately. Forager’s public pressure campaign citing market comps and going directly to shareholders is the playbook for forcing a board to the table without triggering a full proxy fight. We expect Forager to raise its bid by $0.50–$0.80 per share (to the $5.25–$5.60 range) over the next 4–6 weeks, contingent on Kubra’s status. If that sweetened offer is also rejected, a tender offer or proxy fight becomes near-certain.

The board’s complete refusal to engage (even through advisors) is increasingly difficult to defend fiduciarily. At some point, ISS and Glass Lewis will weigh in, and their recommendations will be critical for the annual meeting proxy vote.

Bottom Line

The Forager-Repay situation is a live case study in everything that makes M&A compelling: a motivated acquirer with a credible bid, an entrenched board pursuing a high-stakes counter-strategy, competing activist blocs, and genuine uncertainty about which path creates the most value.

At $4.80, the offer is real, the premium is legitimate, and the deal is financeable. Whether it’s the right price is genuinely debatable, and this creates opportunities for investors looking at special situation / merger arbitrage

For investors holding RPAY: the risk/reward from current levels ($4.00–$4.11) to the offer price ($4.80) is approximately 17% upside, against meaningful downside if both the deal and the Kubra integration disappoint. That’s an asymmetric trade worth watching closely.

For M&A professionals: study the poison pill timing, the defensive acquisition thesis, and the dual-activist dynamic. Whatever the outcome, this is a textbook example of how hostile bid situations actually unfold. This one is messy, public, and will be decided as much by governance mechanics as by economics.

Stay tuned. This one has plenty of runway left.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. The author does not hold positions in RPAY or any affiliated entity. All data sourced from publicly available SEC filings, press releases, and financial reports.

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A quick recap

The SPS is one of the most contentious and confusing aspects of the investment case for Fannie Mae and Freddie Mac.

In September 2008, Treasury put Fannie and Freddie into conservatorship and signed the Preferred Stock Purchase Agreements. In return for an unlimited backstop, it received non-voting senior preferred stock in each GSE plus warrants to buy 79.9% of the common at a nominal price, expiring September 7, 2028.

The GSEs drew a combined $193 billion between 2008 and 2012. That amount was added straight to the liquidation preference. Treasury was owed 10% annual dividends on the outstanding balance (12% if missed). The GSE’s were forced to mark losses to market via (unfair and unrealistic) loss provisions. Under that strain, they could not reliably pay dividends on the SPS amount. But the losses never materialized, and just as the companies were about to reverse the accounting provisions, and thereby repay Treasury in full (with interest), the government unilaterally amended the PSPA to sweep of every dollar of net worth above a tiny reserve. That’s the Net Worth Sweep.

Under this shameful agreement, Fannie and Freddie have sent Treasury roughly $301 billion. Yet the SPS liquidation preference never shrank. Instead if grew. As of Q1 2026, Fannie’s stands at $230.5 billion, Freddie’s at $143 billion. Combined: $373.5 billion. The CBO sees it climbing toward $400 billion by year-end as commitment fees keep accruing.

The paradox is obvious. They paid back more than they borrowed, with interest, but Treasury’s contractual claim is larger today than when the checks first went out.

**Note: I know this has glossed over many details on the Net Worth Sweep. But it will have to suffice for the purposes of this article.

The Money Arithmetic

Bill Ackman and Pershing Square laid this out in November 2025. The numbers hold up better than the critics admit.

Under the original PSPA, Treasury was entitled to 10% dividends on the outstanding liquidation preference. Run the actual $193 billion draws through a timing-adjusted 10% calculation and you get roughly $276 billion in total contractual dividends owed. The GSEs have paid $301 billion—about $25 billion more than the deal required. That works out to an internal rate of return for Treasury of roughly 11.6%.

Ackman’s core point: the economic substance of the investment has been satisfied. The government took real risk when it mattered most and collected more than the agreed return. The $373.5 billion liquidation preference is a legal artifact of how preferred equity works in that dividends don’t reduce principal, and the LP was designed to grow, not shrink. The Net Worth Sweep itself is Exhibit A: without the 2012 amendment, normal dividend mechanics might have allowed a repayment path; instead, the sweep extracted every available dollar.

By any normal investment metric, Treasury got its money back plus a solid return. But the instrument is preferred equity, not a loan. The contract doesn’t contain a repayment mechanism that reduces the LP when dividends are paid. Unfortunately for shareholders, both realities can coexist: taxpayers were made more than whole on an economic basis, and Treasury still holds a $373.5 billion contractual claim. This has been upheld by the courts despite considerable efforts to fight it. Resolving this claim is a political and administrative call. Neither Congress or the courts will help.

The Five Possible Paths to Resolution

There’s no single button. Here are the five plausible structures, each with different effects on the capital stack, the budget, investors, and the mortgage market.

1. Administrative PSPA amendment (Ackman-style “deemed repaid”): Treasury and FHFA amend the agreements to declare the SPS economically satisfied and zero out (or nominalize) the entire liquidation preference. No new legislation needed. Then exercise the warrants for 79.9% of the common on a fully diluted basis. Treasury ends up owning exactly 79.9% of the common equity; existing common holders retain 20.1%. Cleanest path for relisting.

2. Full LP-to-equity conversion: Amend the PSPA to convert the entire $373.5 billion LP directly into new common shares at a negotiated price per share. Combined with warrant exercise, this would push Treasury’s ownership well above 80%—likely 90–95%+ depending on the conversion ratio and enterprise value. Massive dilution for everyone else.

3. LP-to-debt conversion: Turn the SPS claim into long-dated GSE bonds. Moves it out of the equity stack and helps with ERCF capital treatment, but adds leverage and doesn’t fully clean the structure.

4. Guarantee fee / explicit backstop: Cancel the SPS in exchange for an ongoing annual guarantee fee on agency MBS. Mirrors the Ginnie Mae model—explicit, priced government backing.

5. Hybrid (partial forgiveness/restructuring + warrant exercise + residual SPS): Forgive or restructure a portion of the LP (say, the economic “excess” plus some negotiated amount), exercise the warrants for the 79.9% stake, and leave a reduced residual SPS on the books (perhaps $150–250 billion after partial write-down/conversion). Treasury secures dominant but not total ownership.

Paths 1-3 and 5 are feasible without Congress, though PAYGO budget scoring is a practical hurdle. The guarantee-fee route almost certainly needs legislation. The Hybrid path depends heavily on the terms “negotiated” (in quotation marks since the government will negotiate with itself on this one).

A quick note on how the Hybrid and Deemed Repaid Paths Compare

Importantly, the Trump administration’s “North Star” in this process are (1) reducing mortgage rates (or at least not making changes that increase them) and (2) achieving an IPO of Fannie and Freddie. As such, the “Pure Repaid” vs. “Hybrid” path decision matters greatly.

• Pure Deemed Repaid (Ackman proposal): The entire $373.5 billion LP is extinguished to zero or nominal. No residual senior claim remains. The Net Worth Sweep ends completely. Treasury exercises the warrants and owns exactly 79.9% of the common; existing common keeps 20.1%. The balance sheet is clean—no ongoing dividend priority ahead of private shareholders. This maximizes enterprise value (higher trading multiples because public investors see a true privatization story), supports faster capital deployment, and makes a successful NYSE relisting far easier. It also aligns cleanly with lower mortgage rates: no overhang means the GSEs can operate with stronger perceived stability, potentially allowing g-fee relief without spooking MBS markets. Key Downside: larger upfront budget scoring hit.

• Hybrid Path: A chunk of the LP (roughly $100–150 billion, starting with the IRR excess) gets forgiven or restructured. Another slice may convert to debt or equity. But a meaningful residual SPS stays on the books at a reduced level, still senior to both junior preferreds and common, with a modified dividend or accrual obligation (e.g., 10% or lower on the smaller balance). Treasury still exercises the warrants for its 79.9% common stake; existing common keeps the same 20.1% post-dilution. The companies must continue servicing that residual SPS first, which forces heavier earnings retention on top of ERCF requirements. Result: delayed or minimal dividends to junior preferred and common for years, a valuation drag (public investors discount the stock for the lingering senior claim), and slightly messier IPO optics. It does offer better political cover and a smaller budget score, but it complicates the IPO goal and could subtly weigh on MBS pricing if markets see incomplete resolution.

In short, the deemed-repaid path delivers the cleanest capital structure for a high-quality IPO and the strongest support for lower housing costs. The hybrid trades some of that cleanliness for easier politics and scoring. The major question would be how much does President Trump care about politics and budget scoring?

The Ackman Path: Administrative Amendment

In my opinion, this remains the cleanest, fastest option. Amend the PSPA (the sixth time) to acknowledge the SPS as satisfied, zero the LP, exercise the warrants, and relist. Treasury walks away with 79.9% of the common in two much stronger companies.

Why taxpayers should like “deemed repaid”: instead of clinging to an illiquid $373 billion LP claim of uncertain collectability, Treasury gets roughly 80% of a relisted, growing enterprise that analysts peg at $300–400 billion combined enterprise value (potentially higher once the overhang is gone and ERCF revisions take hold). That equity stake could easily be worth $240–320 billion in market value, with upside from future sales or dividends. Full conversion to 100% ownership would essentially nationalize the firms, crush private-market discipline, tank valuation multiples, invite more litigation, and look politically radioactive. Eighty percent is already ironclad control without those downsides. The warrant expires September 7, 2028. Technically Treasury could unilaterally change the deadline, but why should they when a clearer and simpler path is in front of them.

Other paths that require Congress to act are non-starters. Congress has not acted on this issue for going on 18 years and is unlikely to start now.

My thesis: the SPS gets resolved via the “deemed repaid” path because this is how Treasury can best satisfy their own stated priorities: lowering mortgage rates and housing finance costs while delivering a credible IPO and conservatorship exit.

The IRR math is real and publicly defensible. The Net Worth Sweep extracted more cash than the original terms contemplated. The warrant clock is ticking. The ERCF revision running in parallel removes the old capital-gap excuse. And this Trump administration is the most privatization-minded since the conservatorship began.

…But there are significant, and very real, challenges

There are legitimate challenges to the “deemed repaid” path that investors should be aware of.

First, the SPS was never structured as a loan. It’s preferred equity. Dividends don’t reduce principal by design. Legally, Treasury can’t just declare it “repaid” without an amendment that survives scrutiny [Note: they are negotiating with themselves, so they it has to survive their own scrutiny…if that makes any sense]

Second, budget scoring would sting. CBO/OMB might treat extinguishing $373 billion as a large one-time cost, triggering PAYGO issues. However, it is unclear how much the Trump administration would prioritize this consideration. [Note: the appointment of Marc Calabria to OMB, where he serves as Associate Director for Treasury, Housing and Commerce will almost certainly make this an issue]

Third, litigation risks from JPS holders. Cancelling the LP (SPS deemed repaid) moves them up the capital stack and materially improves their odds of par recovery as well as dividend reactivation. But they could still sue if Treasury’s PSPA amendment to deem SPS repaid funnels value straight to Treasury’s warrants/commons without explicit priority for JPS.

Fourth, optics about “bailing out hedge funds” is real. But I suspect the Trump administration does not have this very high on their priority list.

What to watch for in the coming months

• FHFA’s July 2026 report: concrete language on SPS treatment under capital reform is a strong signal

• Public comments from Secretary Bessent or Director Pulte on the IRR math, “taxpayers made whole,” or IPO timing

• Any OMB/Treasury signals on budget scoring for PSPA changes

• Warrant-exercise authorization

• Litigation settlements or congressional noise on explicit guarantees

I have long advocated for the SPS being deemed repaid…

To me, the “SPS deemed repaid” thesis is the most compelling and contested idea in the GSE trade. The economics are real, the administrative tools exist, the clock is ticking, and the administration’s own priorities of lower mortgage rates and a successful IPO/end to conservatorship now point strongly toward the cleanest resolution possible.

I expect a structured sixth PSPA amendment that extinguishes the vast majority (or all) of the LP, exercises the warrants for Treasury’s 79.9% common stake, and sets up a clean transition out of full conservatorship. Any hybrid elements would be engineered with a minimal or rapidly vanishing residual SPS to avoid undermining the IPO or rate goals. To the extent that the “explicit-guarantee” approach is tried, it will be handed to Congress to run in parallel. More likely, it gets quietly dropped.

By deeming SPS repaid and extinguishing the LP, Treasury gets a story it can defend, materially improves JPS recovery odds (cleaner waterfall, closed capital gap), dilutes common via the warrant (as always expected), leaves MBS and senior debt largely untouched, and hands taxpayers 80% of two growing companies rather than a stale LP claim.

…but the trade remains binary on the PSPA terms

Watch for language on an ERCF revision. This is likely to be the first major signal that Fannie and Freddie will exit conservatorship before the end of President Trump’s term.

This issue breaks down the four themes that defined the opening stretch of 2026, the headline deals you need to know, and the ones that got away.

1. The AI arms race goes full-throttle M&A

The biggest deal of the year (or decade?) landed in January when SpaceX absorbed xAI in an all-share transaction valuing the Elon Musk AI venture at $230 billion. Not bad for a company that barely existed two years ago. The deal consolidates Musk’s AI ambitions under the SpaceX umbrella and signals that the AI infrastructure race has entered its capital-intensive phase.

But xAI was just the headline. The AI M&A wave ran deep:

• Google closed its $32B acquisition of Wiz in March, the largest cybersecurity deal ever, giving Alphabet a cloud-native security stack it badly needed.

• Palo Alto Networks swallowed CyberArk for $25B in February, creating a cybersecurity platform spanning network security and identity management.

• IBM acquired data streaming platform Confluent for $11B in March, betting that real-time data infrastructure is the connective tissue of enterprise AI.

• In April, SpaceX was back — this time reportedly circling Anysphere (the company behind the Cursor AI coding assistant) at a $60B valuation. If completed, it would mark another Musk play to own the AI developer toolchain.

• Even the rumour mill was AI-flavored: OpenAI was linked to Pinterest ($15.8B) — a play for visual training data — and Stripe reportedly explored absorbing PayPal ($40B), though PayPal quickly denied the talks.

The message is clear: the companies building the AI future aren’t waiting for organic growth. They’re buying it.

2. Pharma’s buying spree: the patent cliff has arrived

Big Pharma has been talking about the looming patent cliff for years. In early 2026, they stopped talking and started writing checks. The sector produced a remarkable density of $7B+ deals across all four months:

• Abbott Laboratories acquired cancer diagnostics leader Exact Sciences for $23B in March — the largest diagnostics deal in history, positioning Abbott as the dominant player in early cancer detection.

• Waters Corporation paid $18.8B for BD Biosciences in February, a bold move to build an end-to-end life sciences analytical platform.

• Novartis bought RNA therapeutics pioneer Avidity Biosciences for $12B in February, doubling down on next-generation drug modalities.

• Danaher launched a $9.9B cash bid for patient monitoring specialist Masimo at $180/share.

• Gilead Sciences paid $7.8B for Arcellx in February, acquiring a next-gen CAR-T therapy pipeline to extend its cell therapy franchise.

• Eli Lilly entered the in vivo cell therapy space with a $7B acquisition of Kelonia Therapeutics.

• In April, India’s Sun Pharmaceutical made a $11.75B cross-border bid for Organon, targeting women’s health and biosimilars.

The thread connecting all of these? Platforms over products. Buyers are focused on acquiring technology platforms, diagnostic capabilities, and therapeutic modalities that can generate pipelines for a decade. It’s a structural shift in how pharma thinks about M&A.

3. European Banking is riding a consolidation wave

The banking sector delivered some of the period’s most consequential announced deals. This was most pronounced in Europe, where the long-awaited cross-border consolidation finally appears to be happening.

The marquee deal: UniCredit’s $39.3B bid for Commerzbank, announced in March. This is the deal European banking watchers have been waiting for. A cross-border merger that, if completed, would create a continental banking champion. The deal faces significant regulatory and political hurdles in Germany, but UniCredit’s persistence (after months of stake-building) suggests real commitment.

Meanwhile in the US and Asia…

• Fifth Third Bancorp acquired Comerica for $10.9B in February, creating a top-10 US regional bank.

• Huntington Bancshares bought Cadence Bank for $7.4B, extending its Southeast footprint.

• In Asia, HSBC moved to take full control of Hang Seng Bank in a $13.6B deal in January, consolidating its Hong Kong franchise.

The pattern here is scale. With higher capital requirements, tighter margins, and the cost of technology modernization rising, mid-size banks are looking to scale.

4. Energy, Infrastructure and the “Mega-Deal Industrial Complex”

The physical world hasn’t gone away. If anything, the capital intensity of the energy transition and infrastructure buildout is producing deals that rival the tech sector in size.

• Constellation Energy closed its $29.1B acquisition of Calpine in January — creating the largest clean energy producer in the US by generation capacity. With AI data centers driving unprecedented power demand, this deal looks prescient.

• Deutsche Telekom reportedly explored acquiring the remaining 47% of T-Mobile US it doesn’t own for ~$101B in April. If it materializes, it would be among the largest telecom transactions ever.

• Kone announced a €29.4B ($34.4B) acquisition of TKE in April, creating an elevator and escalator behemoth. The deal consolidates an industry that’s been circling itself for years.

• A consortium of SMBC, Apollo, and Brookfield completed a $28.2B take-private of Air Lease Corporation in April, the largest aircraft leasing deal on record.

• In France, a consortium of Bouygues, Iliad, and Orange announced a $24B restructuring of SFR, reshaping the French telecom market.

Other notable industrial deals: McCormick’s $20B cash acquisition of Unilever’s food business in March ($44.8B enterprise value including assumed debt), and Brad Jacobs’ QXO platform making a $17B play for building products distributor TopBuild in April.

What is means for the rest of 2026

Three takeaways

1. AI is the new strategic imperative. Every sector — tech, pharma, finance, industrials — is making AI-adjacent acquisitions. The deals aren’t just in “AI companies” anymore; they’re in the data, infrastructure, and platforms that make AI work.

2. Scale is in vogue. From banking to mining to telecom, the cost of technology, regulation, and competition is forcing consolidation across every industry that hasn’t already consolidated.

3. The rumor-to-deal pipeline is enormous. The volume of reported-then-denied deals (Stripe/PayPal, Nvidia/Dell, Musk/Ryanair) suggests that boards and advisors are running far more processes than are reaching the announcement stage. Many of these “denied” approaches will likely resurface — just as Rio/Glencore did.

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Over the last few quarterly updates, a curious re-framing of capital levels has not gone unnoticed. For instance, see the quote below from Freddie Mac CFO Jim Whitlinger’s prepared remarks

"Excluding buffers, our capital shortfall was $105 billion at the end of the first quarter, largely because the $73 billion of Senior Preferred Stock does not qualify as regulatory capital."

Read that again. He is saying that, as a technical matter, if its $73 billion of Senior Preferred Stock (SPS) qualified as regulatory capital their capital shortfall (excluding buffers) would collapse from $105 billion to roughly $32 billion. And that is against the current, unreformed ERCF. Pair that with a revised ERCF and the math shifts dramatically. [Note: Treasury’s SPS does not meet the ERCF’s Basel III-aligned capital definition, and we will return to this later]

In my previous article A golden window of opportunity for Fannie Mae and Freddie Mac I outlined why the Fed’s recent capital rule changes for MBS represented a big opportunity for FHFA to revise the ERCF. It makes no sense for the GSEs to have capital requirements more punitive than banks for the same underlying asset class. A simple harmonization of ERCF to make it consistent with the new regime is a clearly logical step.

Since this article, there have been some new developments. Largely, and surprisingly, unnoticed by most investors in Fannie Mae and Freddie Mac. Three things are now in motion simultaneously: Trump’s March 2026 executive order directed FHFA to revise capital requirements. The Fed/OCC/FDIC published 1,500 pages of proposed banking capital reforms on March 19. And the SPS acting as a giant pain in the capital stack. This last point is increasingly being framed by both the companies themselves as an obstacle to be dissolved, not managed around. These positions, taken by executives at both GSEs, would have been unthinkable under previous administrations (including Trump’s first term).

If all three resolve, both GSEs could technically exit conservatorship the day the ERCF final rule takes effect. No waiting. No IPO required to fill a capital hole. The timeline moves becomes very feasible within President Trump’s current term.

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The Regulatory Chain Reaction begins…

1. The Executive Order

On March 13, 2026, Trump signed ‘Promoting Access to Mortgage Credit,’ a housing affordability-focused EO that, for our purposes, does two specific things. It tells the Fed, FDIC, OCC, and NCUA to revise capital regulations for banks which includes risk weights on portfolio mortgages, mortgage servicing rights, and warehouse lines. And it tells FHFA to consider revising capital requirements and to submit a report within 120 days recommending changes.

The 120-day clock expires mid-July 2026. That report is the first hard milestone in the ERCF revision story, and the market will parse every word of it.

The underlying logic is straightforward: GSE guarantee fee pricing is a direct function of capital requirements. When the Biden administration implemented the ERCF in its g-fee pricing in 2022, average fees jumped 7–10 basis points overnight — from the 45-48 bps range to roughly 55 bps. The GSE share of new mortgage originations has declined every year since, hitting 37.6% in 2025, the lowest in nearly two decades. The administration’s position is that this outcome is incompatible with its stated goal of making mortgages affordable. The EO is the opening bid on reversing it.

2. The Banking Capital Overhaul

On March 19, only six days after the EO, the Fed, OCC, and FDIC jointly released the most significant recalibration of U.S. bank capital requirements since the post-crisis reforms. Three separate NPRMs, spanning 1,500 pages, with comments due June 18. The relevant provisions:

• — LTV-based tiering for residential mortgage risk weights, replacing the flat 50% standard weight. Lower-LTV loans get meaningfully lower charges.

• — The securitization risk weight floor drops from 20% to 15%, reducing capital charges on agency MBS holdings at banks.

• — Mortgage servicing asset capital deductions are replaced with a flat 250% risk weight — a net improvement for most community banks.

• — Overall bank capital requirements decrease modestly across the board, with larger cuts for smaller, more traditional lending-focused institutions.

The direction is unambiguous. The agencies are explicitly trying to ease credit conditions in the mortgage market. And here’s the problem that creates for the ERCF: the ERCF was designed to mirror the ‘advanced approaches’ framework used by the largest U.S. banks. If the banking framework those requirements were anchored to is now being revised downward, maintaining an ERCF calibrated to the old, more conservative version is analytically incoherent.The GSEs would be required to hold capital against the same credit risks at a higher rate than the banks who buy their paper. That cannot stand, and the EO signals that Washington knows it.

Independent analysis at the time the ERCF was adopted estimated that actual capital needed for safety and soundness, based on Fannie’s and Freddie’s own stress test results, was $120-135 billion combined. The ERCF demanded $312 billion, or a whopping 2.4x what the stress tests indicated. Since then, both companies’ stress test results have improved materially.

3. The Capital Math

Now, using yesterday’s actual Q1 2026 numbers, here’s what the capital picture looks like across four dimensions: current ERCF requirements, the SPS deduction, the effect of a revised ERCF, and where each enterprise lands if you combine both.

Lets walk through the figures in the above table. Fannie Mae’s adjusted total regulatory capital deficit was approximately -$18 billion at Q1 2026 (vs. total requirement, including buffers, of around $205 billion). That looks daunting. But that -$18B figure is almost entirely the result of one thing: the $120.8 billion of SPS on Fannie’s balance sheet is subtracted from regulatory capital because Treasury’s preferred doesn’t meet the ERCF’s qualifying capital definition.

Treasury deeming the SPS repaid changes picture dramatically. Fannie’s ERCF-qualifying capital jumps to approximately $103 billion. Against a revised ERCF requirement in the $88–112 billion range, Fannie is at or near compliance right now. Not in five years. Right now.

Freddie’s picture is almost identical in structure, if somewhat tighter in the numbers. As CFO Whitlinger stated on yesterday’s call, the $73 billion SPS is “largely” responsible for the $105 billion capital shortfall (excluding buffers). Remove that deduction, and Freddie’s qualifying capital becomes approximately $69 billion. Against a revised ERCF minimum (excluding buffers) in the $47–60 billion range, Freddie meets minimum requirements immediately. It would still need to build into full buffer compliance of roughly $6–26 billion depending on the revised calibration. At a current run-rate of $3.6 billion quarterly earnings, this puts Freddie Mac on pace to close the gap within 1–2 years.

The combined run rate is $7.3 billion per quarter — $29.2 billion annualized. Any remaining buffer gap after a revised ERCF + SPS resolution closes within a few quarters. Not years. Quarters.

A plausible timeline emerges…

Revising the ERCF requires a formal APA notice-and-comment rulemaking that includes a proposed rule, comment period and a final rule. The July 2026 report is not the rule; it’s the preview. The most realistic sequencing from there: proposed rule in Q3 2026, comment period through late 2026, final rule in H1 2027. That timeline lands the ERCF final rule in the same window where PSPA resolution discussions will be at their most advanced. The two processes are running in parallel, not sequentially.

A note of caution: Treasury’s SPS decision is a wildcard

I have long advocated that the simplest and most logical solution for Treasury to deal with their SPS is to simply recognize past dividend payments and deem it repaid. But investors need to be clear eyed that this is uncertain. There have been no indications from Treasury as to their preferred course of action, and this remains the single biggest risk to the timeline above and to shareholders in the companies.

I will do a follow-up article going into the details of what Treasury could do with their SPS in a subsequent article. Suffice to say, if you believe that the SPS being deemed repaid is a likely path, then the recent Executive Order and Fed Capital Rule changes mark a significant milestone. One way or another, investors won’t need to wait long - Q2 2026 could herald a major signal for whether Fannie Mae and Freddie Mac exit conservatorship during President Trump’s current term.

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Recent M&A studies show earn-outs appear in roughly 22 to 33 percent of private-company deals. The median performance period is twenty-four months, and the median earn-out represents about 43 percent of the total purchase price. Here is how to structure them so they work for you.

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Choose the Right Metric

Revenue is easier to measure and harder for a buyer to manipulate, which is why it now appears in about 62 percent of earn-outs. EBITDA metrics reward profitability but can be gamed through accounting choices. Pick the metric that best reflects what you control today.

Set Clear Definitions and Timelines

Define every term in plain English: what counts as revenue, how expenses are allocated, and what happens if the buyer changes the business model. Shorten the earn-out period to twelve or twenty-four months whenever possible. Longer periods increase uncertainty and buyer resistance.

Negotiate Buyer Obligations

Include a covenant that the buyer must operate the business in good faith and cannot take actions designed to reduce your earn-out. Require quarterly reports and an independent accountant to resolve disputes. These protections turn a vague promise into enforceable terms.

Limit the Downside

Cap your exposure by negotiating a floor on the base purchase price and making sure the earn-out is additional, not a replacement. Many owners also negotiate accelerated payment if the buyer sells the company again during the earn-out window.

Use Them Sparingly

Earn-outs work best when there is genuine disagreement about future growth. If the gap is small, a higher base price with a modest seller note often creates less friction. The goal is to get paid for the value you created without turning the next two years into a legal battle.

When structured thoughtfully, earn-outs become a tool that aligns interests instead of dividing them. They let you sell today at a fair price while still participating in tomorrow’s success.

I sit down with owners every week to map out exactly which structure makes the most sense for their situation. There is no charge for that first conversation. Reach out if you would like to talk through where your company stands today. Protecting your upside does not have to come at the cost of a clean close.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality

Recent reports show well-organized virtual data rooms can shorten due-diligence cycles by days or even weeks, with some deals closing a full twelve days faster. Here is exactly how to build one that works in your favor.

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Start Twelve to Eighteen Months Early

Do not wait for the first buyer call. Begin collecting documents now while you are still running the business. Create folders for financials, legal, operations, customers, employees, and intellectual property. The best rooms follow a standard M&A index so buyers know where to look.

Organize for Speed and Search

Use a professional virtual data room platform with full-text search, version control, and permission settings. Group documents logically: three years of audited financials first, then tax returns, contracts, customer lists, and employee agreements. Index every file so a buyer can type “customer concentration” and find the answer instantly.

Remove Friction and Red Flags

Redact personal information before uploading. Provide clean, normalized financials instead of raw QuickBooks exports. Include a separate “Q&A” folder for questions that come up during diligence. Buyers who find answers quickly stay excited and keep competing.

Control Access and Track Activity

Grant access in stages. Give financial buyers basic information first, then open more sensitive folders once you have a serious letter of intent. Most platforms show you exactly who is looking at what and how long they spend. That intelligence helps you anticipate their concerns.

Keep It Updated

Set a weekly routine to refresh numbers and add new contracts. Nothing kills momentum faster than a buyer pointing out outdated information. A living, breathing data room shows you run a tight ship.

A strong data room does more than save time. It removes doubt and lets buyers focus on the upside of your company instead of hunting for problems. The owners who treat this step seriously almost always see stronger offers.

I sit down with owners every week to map out strategic options and M&A strategies that make the most sense for their situation. There is no charge for that first conversation. Reach out if you would like to talk through where your company stands today. A few weeks of preparation here can change the entire trajectory of your sale.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality

This premium buy-side research is behind a paywall and it is worth it. This report is a long-form, data driven detailed analysis of Prudential Financial and why it offers a compelling value vs. its market peers.

Report includes:

• Overview and investment thesis

• Deep dive into Prudential’s business

• Industry analysis and Prudential’s competitive positioning

• Analysis of key financial metrics vs. peers (ROE, ABV, AUM, EPS, Dividends, Buybacks

• 4 Valuation Models Used: SOTP, DDM, Residual Income, P/ABV Comps

• Investment thesis and justification for price target

  DealFlow: Buy, Sell, Grow is a reader-supported publication. To access premium buy-side research, become a paid subscriber

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Recent data shows stock sales make up only about 23 percent of M&A deals, especially in the middle market. Asset sales dominate because they let buyers leave unwanted liabilities behind. Here is how the two structures compare and when each makes sense.

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Tax Consequences for You as Seller

In a stock sale you pay capital-gains tax on the entire proceeds, usually at the long-term rate. In an asset sale the company itself is taxed first on the gain from each asset, then you are taxed again when the proceeds flow to you as a shareholder. That double tax can feel painful, but there are elections like 338(h)(10) that sometimes let you treat an asset sale as a stock sale for tax purposes. In my experience, knowing these elections early can save owners hundreds of thousands without changing the buyer’s structure preference.

Liabilities and Risk

Asset sales are cleaner for buyers because they pick only the assets and contracts they want and leave lawsuits, old debts, or employee claims with the selling entity. Stock sales transfer everything, which is why buyers demand bigger escrows and longer indemnification periods. If your company has clean books and few known risks, you have leverage to push for a stock deal.

Speed and Contract Transfers

Stock sales close faster because there is no need to reassign leases, customer contracts, or licenses one by one. Many contracts have change-of-control clauses that require consent. Asset sales trigger those consents and can add weeks or months. If speed matters more than tax savings, a stock structure can be worth the conversation.

When Buyers Push Hardest

Private-equity buyers and family offices are often more flexible on structure than corporate strategic buyers, who may need assets for integration reasons. In deals under $50 million, buyers frequently insist on asset purchases unless you have strong reasons otherwise. The key is to know your walk-away point before the letter of intent arrives.

How to Prepare Either Way

Review your contracts, leases, and licenses now. Get a preliminary tax analysis from your CPA showing the net after-tax difference between the two structures. That single page becomes powerful ammunition at the negotiating table. The earlier you run the numbers, the more options you keep open.

These two structures are not just legal details. They determine how much you actually take home and how smoothly the deal moves. Spend time on this decision before you start marketing, and you avoid the most common source of last-minute surprises.

I often sit down with owners to map out exactly which structure makes the most sense for their situation. There is no charge for that first conversation. Reach out if you would like to talk through where your company stands today. The right structure can easily add substantial sums to your net proceeds.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality

On March 19, 2026, the Federal Reserve, FDIC, and OCC took a major step toward reshaping U.S. banking regulation. In a coordinated set of proposals, the agencies outlined revisions to the U.S. Standardized Approach and an expanded risk-based approach for larger banks. The changes are explicitly designed to be more risk-sensitive and less punitive than the 2023 Basel III endgame proposal, particularly for traditional lending activities like residential mortgages and mortgage servicing. Overall, large banks could see capital requirements fall by approximately 4.8 percent, with midsize institutions benefiting from a 5.2 percent reduction and smaller banks up to 7.8 percent.

The driving rationale, as articulated by Fed officials and echoed in coverage including The Wall Street Journal, is to reverse the migration of mortgage origination, holding, and servicing out of the regulated banking system into nonbanks and GSEs. By making on-balance-sheet mortgage activity more capital-efficient, regulators hope to broaden participation, improve liquidity, and support housing access without compromising safety.

This article takes a deep dive into these proposals, with a sharp focus on the mortgage-specific provisions. It then compares them to the far more conservative Enterprise Regulatory Capital Framework that governs Fannie Mae and Freddie Mac. Finally, it explores the central hypothetical:

• What if FHFA rewrote the ERCF to mirror the new bank rules exactly?

• How much capital would each GSE actually need?

• How does that compare to their current GAAP net worth?

• And, assuming the senior preferred stock held by Treasury is deemed repaid through administrative or legislative action, how quickly could the Enterprises exit the seventeen-year-old conservatorship?

All figures are drawn from the GSEs’ official disclosures, the agencies’ March 19 proposals, and contemporaneous analyses. While no such alignment has been proposed or announced, the potential for it is a golden opportunity for FHFA (Fannie and Freddie’s regulator) to finally get the ball moving on returning these two financial giants to public markets.

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The good news is that none of these levers require a complete overhaul. Most can be improved in the twelve to twenty-four months before you decide to sell. Here is exactly what buyers look for and how you can pull each lever in your favor.

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Lever 1: Recurring Revenue Streams

Buyers love predictability. A business with 60 percent or more of its revenue locked in through subscriptions, maintenance contracts, or long-term service agreements commands a noticeably higher multiple than one that starts from scratch every month.

In my experience, converting even a large portion of project-based revenue to recurring contracts can lift the valuation multiple by two turns or more. Recent M&A data on managed service providers and software businesses shows companies with strong recurring revenue routinely trade at 9–12 times EBITDA, while project-heavy peers clear only 5–6 times on the same profitability.

Start small. Look at your top customers and offer them an incentive to move to a quarterly or annual agreement. Document every renewal rate. Buyers will dig into those numbers during due diligence, and strong retention figures become one of your best selling points.

Lever 2: Diversifying Your Customer Base

Nothing scares a buyer faster than hearing that one client accounts for 30 percent or more of your revenue. They immediately picture what happens if that customer walks.

The fix is straightforward but takes time. Identify your largest clients and deliberately go after two or three new verticals or geographic markets. Reducing reliance on any single customer below 20 percent of revenue often changes how buyers perceive the risk of the business. Industry studies show that concentrations above 25 percent can trigger 15–35 percent valuation discounts or force buyers to demand earn-outs and heavier escrows.

Lever 3: Consistent EBITDA Growth

Buyers do not just look at your current profit level. They buy the trajectory. A company showing 15 percent compounded growth over the last three years will almost always trade at a higher multiple than one that is flat or erratic.

The key is to make the growth visible and repeatable. Track monthly EBITDA, cut obvious waste, and invest in the activities that drive the top line. I recommend owners build a simple rolling twelve-month view so trends jump off the page. When a buyer sees steady upward movement, they start imagining what they can do once they own it.

Lever 4: Improving Gross Margins

Buyers pay close attention to how much profit you keep on every dollar of revenue. Strong gross margins signal pricing power, efficient operations, and a product or service that customers value enough to pay for.

Review your cost of goods sold line by line. Can you renegotiate supplier contracts? Can you raise prices on your most loyal customers without losing them? Even modest margin improvements flow straight to the bottom line and can have an outsized effect on the multiple buyers are willing to pay. Recent SaaS and software transaction data shows companies pushing gross margins above 80 percent routinely command a 100 percent-plus premium to the market average.

Lever 5: Building a Strong, Independent Management Team

The moment a buyer realizes the owner is the business, the valuation drops. They do not want to buy a job; they want a scalable asset.

Start delegating key decisions now. Promote or hire people who can run day-to-day operations without you. Document their responsibilities and show a clear org chart. Buyers routinely pay a noticeable premium for businesses that can run without the owner on site. In my experience, the absence of a solid second-tier team is one of the fastest ways to see a 15–25 percent haircut in the final offer.

Lever 6: Cleaning Up and Normalizing Financials

Buyers hate surprises. Messy books, personal expenses mixed in with business ones, or missing records all create doubt and lower offers.

Spend the time to get your financials audited or at least reviewed by a CPA. Remove owner perks and normalize any one-time expenses so the true earning power shines through. I have seen owners add hundreds of thousands to their valuation simply by presenting clean, professional financial statements that a buyer can trust on day one.

Lever 7: Strengthening Your Competitive Moat

What keeps competitors from copying you tomorrow? It could be proprietary technology, a unique process, exclusive contracts, or even a powerful brand in your niche.

Take inventory of what truly sets you apart and protect it. File the patent, lock in the key supplier agreement, or build the customer loyalty program that competitors cannot match overnight. Buyers consistently pay more for businesses with a genuine, defensible edge. The stronger that moat, the less risk they see and the higher the multiple they offer.

These seven levers work together. Pull two or three of them hard and you will see the valuation move. Pull all seven and you position your company to attract the best buyers and the strongest offers.

If you are even thinking about a sale in the next few years, the smartest move is to start on these improvements now. The earlier you begin, the more time you have to let the results compound.

I sit down with owners every week to map out exactly which levers make the most sense for their situation. Reach out if you would like to talk through where your company stands today. There is no charge for that first introductory meeting. The difference between an average exit and a life-changing one often comes down to these seven numbers.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality

What if a single transaction could dismantle the entrenched duopoly in U.S. payments processing, generate billions in synergies, and elevate a regional player to national prominence—while navigating intense antitrust review and investor skepticism? That was the core proposition of Capital One’s $35.3 billion all-stock acquisition of Discover Financial Services, unveiled in February 2024 and consummated on May 18, 2025, following a protracted regulatory process. As of March 2026, with one year of integrated operations, the results are unfolding: robust revenue growth and stabilizing credit quality, tempered by persistent ROE declines and integration costs exceeding initial estimates.

Building on my prior analysis of Cisco’s $28 billion acquisition of Splunk, where understated projections potentially left significant value untapped, this examination dissects the Capital One-Discover transaction for deal professionals and enthusiasts. We will detail the strategic rationale, trace the negotiation chronology, analyze the valuation framework in depth, evaluate its assumptions, review regulatory challenges, compare to analogous deals, assess post-merger outcomes, and extract key insights.

Strategic Rationale: Capital One’s Push for Scale and Independence in a Competitive Landscape

In consumer finance, where data analytics and network control drive margins, acquisitions are essential for maintaining competitiveness. Capital One, established in 1994 as a credit analytics specialist, had amassed $482 billion in assets through targeted lending products like the Venture rewards card and retail partnerships. However, by 2023, it faced pressures including elevated delinquencies in subprime segments, competition from FinTechs such as Affirm, and substantial fees paid to Visa and Mastercard for transaction processing.

Discover, with $143 billion in assets, offered a complementary profile: a focus on prime borrowers, a proprietary payment network processing 4% of U.S. card volume and extending to over 200 countries through Diners Club and PULSE, and a strong debit business. Despite these strengths, Discover contended with operational issues, including a 2023 card misclassification incident resulting in a $365 million charge and FDIC enforcement actions, alongside a CEO transition that pressured its stock.

The deal’s value proposition centered on vertical integration. Capital One anticipated $2.7 billion in pre-tax synergies by 2027, comprising $1.5 billion in cost reductions from eliminating overlaps in technology, branches, and operations, and $1.2 billion in revenue enhancements from internal debit routing, which could reduce interchange fees by 20-30%. Beyond efficiencies, the merger enabled cross-selling of premium products to Discover’s 100 million customers, advanced AI applications in lending, and broadened merchant networks to 70 million acceptance points. Following closure, Capital One shifted toward higher-end segments, reducing subprime exposure to emulate American Express’s model while enhancing fraud prevention through aggregated data.

“Critics are wary of the size of the deal, but some analysts say it could create a stronger challenger to Visa and Mastercard.” - Bloomberg

Challenges were evident: Potential cultural mismatches between Capital One’s agile culture and Discover’s established systems risked employee attrition, with 1,100 Discover positions eliminated by March 2026. Technology migrations posed outage risks, and antitrust concerns over the combined 30% subprime market share necessitated a $265 billion community benefits commitment, which critics argued overstated new investments at under $5 billion according to organizations like the National Community Reinvestment Coalition. Nevertheless, the merger promised to chip away at Visa and Mastercard’s over 80% market control, potentially lowering merchant costs over time.

One year post-closure, performance indicators show progress amid headwinds. Third-quarter 2025 revenues increased 23% year-over-year to $15.4 billion, bolstered by Discover’s assets, with organic purchase volumes rising 6.5%. Credit trends improved, with domestic card net charge-offs at 5.04% and delinquencies at 3.93% in early 2026. However, integration expenses exceeded projections, contributing to a $4.3 billion net loss in Q2 2025 from acquisition-related accounting, including $510 million in quarterly intangible amortization. Return on equity fell to 9.63%, below the sector average of 9.78%, leading to analyst downgrades such as Seeking Alpha’s Strong Sell rating, which forecasts an 11.6% downside to a $160.90 fair value due to efficiency shortfalls.

Negotiation Chronology: Mapping the Path from Initial Outreach to Regulatory Approval

Large-scale mergers require meticulous orchestration, often spanning months of discussions, assessments, and adjustments. Similar to the Splunk-Cisco process (initial engagement in 2021 leading to closure in 2023), the Capital One-Discover timeline involved strategic pauses and escalations and complexities.

The groundwork predated 2023, with both companies periodically evaluating growth opportunities amid rising interest rates, fintech competition, and regulatory pressures. Discover maintained independence but entertained advisor contacts following its July 2023 misclassification issue, which incurred a $365 million liability and prompted an FDIC consent order.

The process accelerated in August 2023: Discover’s CEO resigned on August 14, causing a stock decline. Chairman Thomas Maheras received inquiries, including from Stephen Crawford, an advisor to Capital One CEO Richard Fairbank, around mid-August. This led to a September 13 meeting in New York, where Fairbank proposed a stock-for-stock transaction at a 30% premium. Capital One had engaged Centerview Partners and Wachtell, Lipton, Rosen & Katz by mid-August.

In December 2023, the merger discussions between Capital One and Discover hit a significant roadblock when Capital One’s due diligence uncovered critical red flags related to Discover’s compliance and credit risk management. Key issues included a long-standing card product misclassification dating back to 2007, where certain credit card accounts were incorrectly placed in higher merchant pricing tiers, resulting in ongoing merchant settlement discussions, regulatory scrutiny, and an SEC investigation. Discover had already recognized approximately $290 million in estimated penalties as of September 30, 2024, tied to a 2023 FDIC consent order mandating enhancements to consumer compliance, governance, and risk practices. Additionally, concerns arose over the adequacy of Discover’s compliance management system and credit risk framework, which Capital One deemed insufficient for alignment with its standards and regulatory expectations. These findings prompted Capital One’s management to inform Discover on December 7 that it would not proceed, citing the diligence status and external factors like Discover’s rising stock price, which would necessitate a higher exchange ratio.

The temporary halt, reviewed and affirmed by Capital One’s board on December 14, highlighted the potential for substantial remediation costs—estimated within the overall $2.8 billion in acquisition and integration expenses, including one-time fixes for Discover’s issues—and raised uncertainties around regulatory approvals, operational integration, and financial synergies. This pause delayed the process by several weeks, allowing time to assess whether the risks outweighed the benefits, but discussions resumed in January 2024 after market shifts and further evaluations, ultimately leading to the deal’s revival and completion.

Valuation Framework: A Detailed Examination of Projections, Dividend Discount Model, and Comparable Transactions

Valuations in this transaction were based on structured analyses by financial advisors Centerview Partners (for Capital One) and PJT Partners (for Discover). These relied on unaudited management projections, emphasizing conservatism amid economic uncertainty. The analyses incorporated standalone forecasts for both companies, adjusted for synergies, and excluded certain one-time items like Discover’s student loan portfolio disposition (implied NPV of ~$7.25 per share, excluded due to uncertainty). Below, we break down the key components into management projections, the dividend discount model (used as a proxy for DCF), and market comparables.

Management Projections: Building Blocks of Standalone and Synergized Forecasts

The unaudited prospective financial information formed the core inputs, derived from consensus estimates (e.g., from FactSet or street research) for near-term years (2024-2025) and extrapolated for longer horizons (up to 2030, varying by advisor). These projections included net income available to common shareholders (NIAT), earnings per share (EPS), return on average tangible common equity (ROATCE), tangible book value per share (P/TBV), risk-weighted assets (RWAs), total loans, and total capital returns (e.g., dividends and buybacks). Assumptions reflected steady growth amid economic headwinds, with Capital One targeting CET1 ratios of 13% and Discover 12% for capital adequacy. Synergies were layered on top: $2.7 billion pre-tax by 2027

• For Capital One standalone (Centerview’s view, 2024-2030; extrapolated with ~1% NIAT growth in 2026 and ~3% thereafter; RWAs ~3.5% annual growth from 2026)

• PJT’s Capital One standalone projections (2024-2028; NIAT growth 13% in 2025, 7% thereafter; loans/RWAs ~5% annual growth from 2025; capital returns at 68% payout ratio)

• For Discover standalone (Centerview’s view, 2024-2030; NIAT growth ~8% in 2026, 5% in 2027, 11% in 2028-2029, 4% in 2030; RWAs ~3% in 2026, 5% thereafter; 2024 includes student loan sale impact)

• PJT’s Discover standalone projections (2024-2028; NIAT growth ~10% annual average; loans/RWAs ~7-8% growth)

Dividend Discount Model: Discounting Future Cash Flows to Present Value

The primary valuation method was a dividend discount model (DDM), serving as a proxy for discounted cash flow (DCF) tailored to the banking sector. DDM was preferred over traditional DCF because banks’ cash flows are heavily constrained by regulatory capital requirements (e.g., Basel III and CET1 ratios), making free cash flow unpredictable and less relevant—leverage and capital structure are integral to operations, not separable as in non-financial firms. Instead, DDM focuses on distributable dividends (excess cash after maintaining capital buffers), providing a more accurate reflection of shareholder value in a regulated environment where dividends are stable and tied to risk management. This approach aligns with financial institutions’ unique dynamics, where working capital and capex have minimal impact, and earnings are often directed toward reserves rather than unrestricted FCF.

Centerview and PJT applied sensitivities to growth, discounts, and terminals, yielding implied per-share ranges for Discover. Centerview’s DDM (2024-2030 forecasts; discount rates 12.75-13.75% via CAPM: 4% risk-free, 1.4-1.5 beta, 5-6% equity risk premium; terminal P/E 8.5-10.5x on 2030 NIAT; perpetual growth implied ~2-4% in sensitivities): Implied Discover value $120.50-$141.75 per share (standalone), adjusting for synergies to support the exchange ratio (0.88-1.23x ex-synergies, 1.06-1.75x incl.).

PJT’s DDM (2024-2028 forecasts; discount rates 11-13%; terminal P/E 8.5-10.5x on 2028 NIAT): Implied Discover value $117.46-$145 per share.

Market Comparables: Benchmarking Against Peers and Precedents

Comparables analyses supplemented DDM, using selected public companies for multiples and precedent transactions for premiums. Peers were chosen for similarity in consumer finance/banking (e.g., focus on cards, lending).

These supported the deal’s premium as aligned with market norms, though critics noted limited fintech inclusion.Centerview’s comparable companies: P/E (9-11x 2024E EPS) and P/TBV (1.78-2.11x via ROATCE regression) for peers like American Express, Ally Financial, Synchrony Financial. Implied Discover ranges: $107.75-$130 (P/E), $103.25-$121 (P/TBV).

PJT’s similar: P/E 9-11x, P/TBV 1.78-2.11x, yielding overlapping ranges.

Premiums paid: 10-35% applied to Discover’s unaffected $110.49 price (February 16, 2024 close), implying $121.50-$149.25 per share.

Precedent transactions (selected banking deals) informed the range but were not detailed with specific multiples.

Reviewing the P/E comparables we see overlap with the sensitivity analysis and a rough triangulation approach on the final deal value at a roughly 10.5x P/E. This represented a 27% premium to Discover’s market value at the time of the deal.

Scrutinizing the Valuation: Assessing Assumptions and Potential Enhancements

The 27% premium appeared reasonable given Discover’s challenges, but parallels Splunk-Cisco’s conservative approach, where growth projections may have understated potential. NIAT forecasts (3-11% for Discover) overlooked opportunities in network globalization or AI enhancements. Discount rates (11-13.75%) were elevated; reducing to 10-12% might increase per-share value by $10-20.

Comparables were appropriate but limited; incorporating fintech benchmarks like SoFi (12-15x P/E) could justify higher multiples. The premiums range was expansive; a 20-30% banking median aligns with the deal’s 27%, yet deeper precedent transactions (e.g., Synchrony-Ally alignments) were underemphasized. Without alternative scenarios (e.g., 5-7% perpetual growth if synergies surpass $2.7 billion), Discover may have conceded $5-10 billion. Analyst views diverge: BTIG’s post-closure Buy rating cites $21.39 EPS potential, while others highlight ROE shortfalls, estimating fair value at $161.

Navigating Regulatory Hurdles: The Beltway Battles That Shaped the Outcome

Regulatory approval in banking mergers extends beyond financials to public policy. Antitrust concerns over subprime concentration attracted Department of Justice criticism, with groups like the American Economic Liberties Project deeming it anticompetitive and predicting fee hikes. Capital One rebutted by emphasizing network competition, though detractors questioned the efficacy of claimed efficiencies.

The process: Applications filed March 2024; July public hearings; extensions under Biden-era stringency. A post-election administrative change in April 2025 expedited Federal Reserve and OCC approvals, alongside Delaware clearance in December 2024. The $265 billion benefits package (focused on low- to moderate-income lending and branch expansions) was promoted as transformative but critiqued for minimal incremental value.

“Regulators have been tough on big financial mergers, though there are nuances in Capital One’s $35.3 billion takeover bid for Discover.” - New York Times

Benchmarking Against Peers: Contextualizing the Deal in Banking’s Consolidation Wave

To evaluate Capital One-Discover, consider it alongside 2025’s heightened M&A activity (over 150 announcements, with October’s $21.4 billion marking the peak since 2019). Comparisons include Fifth Third-Comerica, Huntington-Cadence, PNC-BBVA (2021 benchmark), and cross-sector to Splunk-Cisco.

Fifth Third’s $10.9 billion all-stock Comerica deal (announced October 6, 2025; expected Q1 2026 close) aimed for regional dominance, yielding a $288 billion entity with leading positions in the Midwest and Texas. The 1.8663 exchange ratio provided a 20% premium to Comerica’s 10-day VWAP ($82.88 implied). Synergies: $850 million gross pre-tax (35% of Comerica’s 2026 expenses), with revenue opportunities in payments and wealth. Timeline: Comerica explored options in summer 2025 amid liquidity issues; CEO contact September 18; Dallas meeting September 19; nonbinding indication September 23; finalization through September 30; execution October 5. Advisors mirrored Capital One’s (Goldman Sachs, J.P. Morgan). Valuations: Conservative DCF/comps supported fairness, with risks in integration and enhanced regulatory category. Unlike Capital One’s network focus, this emphasized footprint expansion, with milder antitrust but comparable community commitments.

Huntington’s $7.4 billion Cadence acquisition (mid-2025 announcement) created a $276 billion top-10 bank via Sunbelt growth and deposit diversification. Valuation: 1.5x tangible book value premium; synergies $800 million (30% cost reductions). Shorter timeline (6 months to close) leveraged regulatory easing. Early 2026 data indicates 15% EPS accretion but initial ROE pressure—echoing Capital One’s trajectory with less subprime exposure.

PNC’s $11.6 billion cash purchase of BBVA USA (announced November 2020; closed June 2021) offers historical perspective: 1.34x TBV and 19.7x 2019 earnings, with $900 million synergies (35% of BBVA expenses) forming a $560 billion national player. Integration overruns ($980 million expenses) delayed benefits, akin to Capital One’s cost escalations. Outcomes: 21% 2022 EPS lift, though the $88 billion benefits plan faced scrutiny—similar to Capital One’s. PNC achieved >19% IRR, illustrating long-term rewards despite early hurdles.

Post-Merger Assessment: Progress, Pain Points, and Forward Outlook

Retrospective analysis highlights resilience: Q3 2025 revenues rose 23%, with synergies advancing (e.g., debit routing implemented early 2026). Yet, Q2’s $4.3 billion loss, cost overruns, and subprime portfolio adjustments underscore challenges. Capital returns via $16 billion buybacks and dividend increases supported shares, but ROE declines indicate ongoing inefficiencies. Credit trends reflect normalization, with charge-offs steady and reserves easing.

“The Discover acquisition drove double-digit growth, but organic card spending and loans also expanded.” - PYMNTS

“[integration costs] will surpass the original $2.8 billion estimate.” - Capital One CEO Richard Fairbank stated during the Q2 2025 earnings call

The company added that it’s still on track for $2.7 billion in total net synergies, due to cost savings and revenue synergies from the combination. But it seems this is taking far longer to achieve than originally anticipated.

Key Insights and Implications: Synthesizing Lessons for Future Transactions

The Capital One-Discover merger exemplifies M&A’s capacity to transform sectors: a calculated integration of networks and data that navigated negotiations, valuations, and regulations to yield a payments contender. It demonstrates how deals emerge (opportunistic timing during vulnerabilities), valuations are constructed (through layered projections and sensitivities), and improvements can be made (by incorporating upside cases to maximize outcomes).

For dealmakers, the takeaways are pragmatic: Align pursuits with market lows for favorable premiums; integrate diligence pauses as risk mitigators; broaden comparables to include emerging peers; and prepare for regulatory variability, where shifts can compress timelines. In banking’s ongoing consolidation, this transaction signals opportunities in tech-enabled scale but warns of execution risks. Conservative assumptions can protect against downside, but can deprive shareholders of real value.

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1. OpenAI acquires IO Products for $6.5 billion

The first one jumped off the front pages of most business news publications. OpenAI, the leading AI research and deployment company known for ChatGPT acquired IO Products for $6.5 billion. IO Products is the AI hardware and devices startup co-founded by former Apple chief design officer Jony Ive (the famed designer behind the iPhone)

The deal is an all-equity transaction and is OpenAI's largest acquisition to date. Strategically, this positions OpenAI to expand into physical AI hardware. With this deal, OpenAI acquires 55 hardware experts that are among the industry’s best. I find OpenAI’s hardware ambitions fascinating and am keen to see what kinds of products they develop.

2. Alfa Laval acquires Fives Cryogenics for $939 million

Alfa Laval, a Swedish industrial company specializing in heat transfer, separation, and fluid handling technologies, acquired the cryogenics business unit from Fives Group for $939 million. Fives Group is a French industrial engineering firm focused on process technologies and equipment.

The heat exchangers and pumps developed by Fives Energy Cryogenics are essential for the efficient liquefaction, regasification, and transportation of gases like LNG and hydrogen, as well as industrial gases such as carbon dioxide and nitrogen. In fact, Fives Energy Cryogenics is a world leader in this domain, with 65 years of experience designing and manufacturing cryogenic heat exchangers and pumps for gas liquefaction.

"This acquisition is a strategic milestone for Alfa Laval. By integrating Fives Energy Cryogenics' cutting-edge cryogenic technology to our portfolio, we are not only extending our technological capabilities but also reinforcing our commitment to driving the energy transition. This acquisition positions us at the forefront of innovation in important future markets, enabling sustainable volume growth and value creation" - Tom Erixon, CEO and President of Alfa Laval.

3. Perenco acquires Woodside Energy’s Trinidad assets for $206 million

The energy industry continues to light up in terms of dealmaking (even the previous Alfa Laval deal is related to LNG transport). Perenco, an Anglo-French independent oil and gas company with E&P operations in multiple regions, has acquired select assets from Woodside Energy for $206 million. Woodside is an Australian energy firm engaged in liquefied natural gas (LNG) and oil production. The deal involves Woodside's interests in the Greater Angostura and Ruby shallow water oil and gas fields offshore Trinidad and Tobago.

The deal will combine Perenco’s newly acquired assets with their existing operations in the Teak, Samaan and Poui (“TSP”) and Cashima, Amherstia, Flamboyant and Immortelle (“CAFI”) fields. This will make Perenco as a major oil and gas producer in the country, responsible for roughly 12% of the total production with a gas production base of >500 mmscfd and oil production >10,000 bpd.

“This acquisition is an exciting, promising addition to Perenco’s acreage in Trinidad and Tobago. It shows our continued commitment and ambition towards developing energy resources and contributing towards the country’s economic growth. This milestone will increase our gross production levels in excess of 100,000 boepd and allows us to further strengthen our partnership with the Government of Trinidad & Tobago. We are confident that our specific skill in mature field assets and marginal resources will secure long-lasting production from the Angostura asset, while prioritizing the safety of our people and environmental sustainability. We are pleased to welcome our new colleagues to the Perenco family and would like to recognize all the players who contributed towards the success of this acquisition. I would like to thank the Ministry of Energy and Energy Industries and all the people at Perenco and Woodside who worked diligently to make the short transition period a success.”

4. Quanterix acquires Akoya Biosciences for $69 million

Quanterix, a US company fueling scientific discovery through ultra-sensitive biomarker detection has acquired Akoya Biosciences, a spatial biology firm offering single-cell imaging solutions. Quanterix’ technology is used to quantify proteins at low levels in blood, serum or plasma. Akoya’s imaging solutions enable researchers to phenotype cells with spatial context and visualize disease progression and therapy response. The deal will establish Quanterix as a scaled leader in early detection of disease for neurology, oncology and immunology markets in blood and tissue. This expands Quanterix’ total addressable market to $5 billion, and enable cross-selling with Akoya’s installed base.

The deal terms were initially announced as an all-stock transaction for $286 million in January 2025. But this was amended downwards in April 2025 amid market concerns. The deal is a cash and equity transaction, with $20 million in cash and the remaining $49 million in equity. Qunaterix will target $40 million in annual cost synergies post-transaction. The final terms of the deal will see Quanterix shareholders own 84% of the combined entity.

“The acquisition of Akoya positions us to deliver comprehensive protein biomarker solutions that leverage signatures in blood and tissue, together providing a more holistic and predictive view of a patient’s disease. This transaction extends our portfolio into new markets and is expected to expand our served addressable market from $1 billion to $5 billion. We believe the combined business will benefit from significant scale, a strong balance sheet and an accelerated path to profitability by 2026” - Masoud Toloue, CEO of Quanterix

5. Sanoh Industrials acquires Winkelmann Powertrain for $13.9 million

Another area I have noticed increased M&A activity has been in automotive suppliers, and I come back to this area for the final deal of this article. Sanoh Industrial Co., Ltd., a Japanese automotive parts manufacturer specializing in tubes, pipes for vehicles, has acquired Winkelmann Powertrain, a Mexican company producing powertrain components for the automotive industry.

The deal is part of Sanoh’s “Last Man Standing Strategy” which aims to secure Sanoh as the #1 global market share leader in automotive tubing. By integrating Winkelmann’s Powertrain business as a subsidiary of Sanoh, they will establish a dominant position in fuel injection for vehicles made in Mexico for the US market. The deal is a big bet on continued demand for ICE vehicles and the slower than anticipated adoption of EV’s in the US market.

About the author: Stephen McNamara is a Sr. M&A Advisor with ONEtoONE Corporate Finance, an international investment banking and mid-market M&A advisory group with offices in 30+ countries. Contact details are in the “Contact” section of DealFlow: Buy, Sell, Grow.

The M&A Advisory team you select will play a significant role in the amount of value created in the deal. An exceptional advisor:

• Asks “Why”?: An exceptional advisor asks “Why” to continuously validate assumptions, eliminate wasted effort, explore new deal options, and sustain deal focus.

• Understands your business: The M&A advisor must have an empirical view of current and future industry trends, enabling technologies and interdependent industries that significantly increases the value ceiling. As a result, they will develop an optimal set of investment candidates for each client.

• Spearfishes: An exceptional investment advisor will find those investors and companies that most value a specific client’s offering. Great advisors use structured frameworks to build a well-defined target profile, the advisor will quickly identify ideal matches for each client.

• Leverages global reach and local insight: A good advisor will leverage an expansive global investor network that connects multiple industries. An effective advisor will leverage access to trusted M&A colleagues with a deep understanding of financial markets, industries, and companies in each region of the world. This allows them to open discussions with new investors and corporate networks that promise to hold a most significant interest in the deal.

• Takes business, personally: A good advisor is continuously mindful that M&A success depends on people to embrace and support implementation – before and after the deal. They know that business is personal and that its most significant value asset must be supported, nurtured, and challenged.

Choose an investment advisor who also possesses the five qualities mentioned above. If you do, you will capture exceptional value in your deal.

Why are so many M&A Advisors poorly rated?

Being an M&A advisor is not an easy task. We have just talked about the characteristics that a good advisor must have to be hired for your company’s transactions. But it is normal for a business owner who thinks about selling his company to be afraid of hiring advisors.

It is a crucial decision, there is a lot on the line, and many things are going through his head: “Are they going to fight for my best interest? Do they have a large enough contact base to sell this? What if the charge me a lot of money, make us work, play around and then nothing happens?”.

It is true, a lot of “advisors” do not do practical work. They are good at documentation, valuations, analysis, etc. But they do not know how to locate the right buyer; they do not have the technical and human resources needed, so they cannot spend the necessary time to find the right buyer. That is why, regardless of their efforts and excellent skills, they fail to sell your company and let you down.

“Our experience in dealing with more than 2000 mandates has shown that 70% of the outcome of a business sale is based on an extraordinary amount of work on the buyer search and contacting of the key decision-makers. That is an intensive and heavy workload that cannot be done by a small team or a single advisor; the reality is that without a strong support system, they will not be able to do it”.

-Enrique Quemada, Chairman of ONEtoONE Corporate Finance

If this is your company and is the most critical transaction of its history, you deserve an elite team working to maximize the transaction sale value. If you want to sell your company, make sure that the advisor you choose can provide you with this level of search capabilities to find your buyer and beware of the buyer who attacks your advisor.

If you sell a business, be warned that buyers know that advisors play a very relevant role for the seller, and some will try to bypass them and speak directly to the company owner.

“Once the conditions for the contract and a deadline to sign the SPA had been set, the buyer asked to have a personal meeting along with our client. The buyer asked for a 30% payment deferral in the meeting, and our client agreed. The next time we met with him, he told us what had happened. When we asked him what guarantees they had given him for this payment, he did not answer. He had not gone into detail with the buyer, and he soon realized what a mistake he had made not having his advisors with him when making concessions”.

In some cases, a buyer tries to gain the client’s trust and encourages him to forget about his advisors, insisting that things will be smoother if they speak one-on-one. Don’t fall into this trap - they are likely thinking they can negotiate with a less experienced person to get a better price.

How can the advisor help his client?

When a business owner asks for advice on his company’s future, the advisor faces two types of clients: those who want to sell their business but do not know-how, and the ones who should sell their company but do not know it yet. What both business owners have in common are significant reasons to sell their businesses. These reasons tend to be:

• The proximity of retirement.

• It is unable to keep up with competitors.

• Lack of sufficient resources to implement the latest developments in his sector.

• Personal reasons such as health issues, being tired after years of hard work or the desire of spending more time with family and loved ones.

For an excellent professional dedicated to clients’ advice, such as a lawyer or a financial advisor, it is vitally essential to advise and guide him towards the best possible decision.

At ONEtoONE, we are a firm specialized in M&A that supports our clients throughout the entire sales process. We offer a 100% specialized service to maximize its value and thus create interest and competition for it. We achieve this thanks to our international team of financial and sectorial experts. Our cutting-edge technology has allowed us to develop a proprietary methodology and developed our proprietary methods.

We guarantee the clients that we will always comply with our three pillars during the sales process: methodology, competence, and transparency. ONEtoONE applies its values and methods in all its services: sale and purchase of companies; mergers, business valuations, investor search, strategic financial advice, and financial advice.

ONEtoONE Corporate Finance is a global investment banking group with 200+ M&A Advisory specialists in over 30 countries and 50+ cities worldwide. They have advised on over 2000 successful M&A transactions, with >70% being cross-border deals.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality.

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Deal size over $1 billion

I would be remiss if I didn’t mention Nippon Steel’s acquisition of US Steel for $14.9 billion. This marks the end of a truly bruising and highly political takeover process. US Steel has struggled with high costs for years, and Nippon’s offer to takeover the company with a promise of new investment into the firm was first proposed in 2023. But of course, US Steel is considered a “strategic asset” with national security concerns and the politics heated up quickly. President Biden effectively blocked the transaction and US-based bidders dropped out. President Trump managed to approve the deal under strict conditions that leave the US Government with control over the US Steel entity via a “golden share” agreement.

“[The golden share grants] the right to appoint an independent director…and Consent rights of the President of the United States, or his designee, on specific matters” - Reuters

If I had to guess, the US Steel saga is far from over. It may lie dormant for awhile, but with the President now able to appoint someone to the Board and have an effective veto over “certain matters”, it is only a matter of time before the politics heats up once more. It is unclear if Nippon, or the US Government, will come to regret this acquisition in the long-run.

Deal size $500 million to $1 billion

For motorcycle enthusiasts, a major M&A announcement: India based Bajaj Auto will acquire Austria’s KTM for $924 million. KTM is an Austrian motorcycle manufacturer struggling with a financial debt restructuring that was threatening to send the firm into insolvency and liquidation. Production facilities in Austria had already been halted, the company was in the courts trying to get a restructuring plan approved - and the deadline was end of May 2025. Bajaj has stepped in, just in time, with the first 200 million Euro installment as part of a larger court-approved rescue. The remaining funds are now approved and on the way (loans plus convertible bonds), with Bajaj gaining majority control over the company. The deal will build on their longtime partnership with KTM and further expand their presence in high-end performance motorcycles. As a condition of the deal, Austrian jobs will be preserved.

“The most important thing in all decisions is the successful future of KTM and the long-term safeguarding of jobs.” - CEO of KTM

Deal size $100 million to $500 million

In an all Singapore affair, Alliance Energy Services has acquired PEC Energy for $165 million. Alliance Energy is part of Liberty Energy Solutions Ltd, which provides energy engineering solutions and proprietary equipment / products to oil and gas refineries and petrochemical facilities globally. PEC is a Singapore based provider of maintenance and integrated EPC services for the oil and gas, petrochemical, chemical and pharmaceutical industries. The deal will expand Alliance / Liberty’s range of services and customer base, mostly in Asia and Middle East markets. Interestingly, Liberty is owned by Private Equity firm ShawKwei & Partners, which specializes in industrial service companies with revenues between $50-$800 million USD. ShawKwei focuses on acquisitions in the industrials and industrial services sectors with expertise in performance improvement / turnaround situations.

“We are excited to welcome PEC into Liberty Energy…PEC’s strong management team, technical expertise, and reputation for reliability and service excellence align well with our strategy of building a global platform for best-in-class energy solutions.”
- Kyle Shaw, Chair of Liberty Energy

Deal size $50 million to $100 million

There were only 4 identified deals in this size range last week. The most interesting was Colt CZ Group’s acquisition of Steel Stamp Inc for $59.5 million. Colt is based in the Czech Republic, and is a global manufacturer of firearms. They have manufacturing hubs in the their home country as well as the USA, Canada, Sweden, Switzerland and Hungary. Steel Stamp is a US based maker of firearm components and has been a long-term supplier to Colt CZ Group. The deal represents a 5x EBITDA multiple of the company’s firearms business.

“The strategic rationale for the transaction is to achieve vertical integration in selected product categories. With this acquisition, Colt CZ Group gains control of a reputable, high-quality precision machining company, that serves as a key supplier of revolver frames, cylinders, spare parts, and other firearm components for the commercial market,” - Radek Musil, CEO of Colt CZ Group

Deal size under $50 million

We remain in the wider defense space - lots of M&A action going on - for the “under $50 million” category this week. UK based Gooch & Housego, a manufacturer of photonics components and systems, acquired US based Global Photonics for $17.5 million. Global Photonics is a manufacturer of optical systems military land applications, as well as for aerospace and industrial sectors. The deal extends Gooch & Housego’s presence as a supplier to the US defense sector, as well as builds their US based manufacturing presence.

I think that defense sector M&A has been heating and am fully expecting more deals to come.

However, they should not be considered a long-term solution. The most important word is “Transitional”. These agreements should be temporary, and a guiding principle of carve-outs should be to avoid TSA’s whenever possible. Where they can not be avoided, they should be as brief as possible. In this way, they enable (rather than delaying) the carved-out business to become fully independent. Below are the top-5 questions about TSA’s for those involved in a carve-out situation.

What is a Transitional Service Agreement (TSA) in a Carve-Out?

A Transitional Service Agreement is a temporary contract between the parent company and the carved-out entity, detailing services the parent will provide post-separation to ensure operational continuity. These services, like IT, HR, or logistics, typically last 6–24 months while the new entity builds its own systems. TSAs are vital because carve-outs often leave the new entity dependent on the parent’s infrastructure, and without a TSA, operations could stall. A major objective of all carve-out projects is to ensure “Day-1 Readiness” of the carved-out business. That means the new business should be able to run as independently as possible on Day-1 after the carve-out is completed.

All TSA agreements should specifically detail service scope, duration, costs, and performance standards to prevent disputes and ensure a smooth transition. When the carve-out is in connection with a divestiture (i.e. the carved-out business is being acquired by a new owner), it is the new owner that should determine whether a TSA is truly needed.

The above example covers IT services post carve-out. But the same principle applies to a range of possible services. For instance, logistics, warehousing, marketing, payroll systems etc. These are all common areas for TSA’s. In the case of a company acquiring the carved-out business, they should ask which processes can be absorbed into their existing systems and processes. Good post-merger integration programs can mitigate the need for longer TSA’s.

What Are the Key Components of a TSA?

A TSA typically includes four key components: scope of services, duration, pricing, and performance metrics. The scope defines what services the parent will provide, such as IT or accounting support. Duration sets the timeline, often with extension options. Pricing outlines costs, which may be fixed or variable, ensuring transparency. Performance metrics, like service-level agreements (SLAs), hold the parent accountable for quality and timeliness [Note: I’ll cover SLA’s in a subsequent article]. These components create a clear roadmap, preventing misunderstandings and ensuring both parties know their responsibilities, like a detailed playbook for a smooth handoff.

What Are the Challenges of Implementing a TSA?

Implementing a TSA can be challenging due to misaligned incentives, unclear terms, or operational complexities. The parent may prioritize its own operations, leading to subpar service for the new entity. Vague terms can cause disputes over costs or quality, while complex operations may strain the parent’s resources. To address these, both parties must negotiate clear terms, align incentives, and monitor performance closely, like refereeing a game to ensure fair play. And this is before the most crucial challenge of all: time. It takes time to negotiate a TSA. Think of the specificity involved and stakeholder alignment needed. If the carve-out is in connection with an M&A transaction then the TSA terms could even impact the valuation and price being paid. If the parent company is not providing sufficient flexibility on TSA’s, the acquiring company may abandon the deal entirely. This is why it is critical to have an advisor that has done this before. They’ll understand the time needed, stakeholders required and address potential risks early on while they can still be handled “easily”.

How Long Do TSAs Typically Last, and Can They Be Extended?

TSAs typically last 6–24 months, depending on the complexity of the carve-out and the new entity’s readiness to operate independently. The duration is set to balance the need for support with the goal of the new entity becoming self-sufficient. However, as a general principle they should be for the minimum required duration so as not to delay true “Day-1 readiness”. For complex systems and services, it is often the case that TSA’s have to be extended. But beware that any negotiation for an extension will happen after the carve-out or M&A transaction has closed. The former parent company may be unsympathetic to potential disruptions because the new company is not ready by the end of the initial TSA. That is why extensions often come with renegotiated terms and considerably higher costs. Clear exit strategies and milestones in the TSA help both parties plan for a smooth end to the agreement, like setting a finish line for a relay race.

TSA’s are inevitable for any complex carve-out, providing a lifeline for the new entity as it gains independence. For companies navigating carve-outs, a well-crafted TSA is like a bridge over turbulent waters—essential for reaching the other side intact.

The most important message I can give for those tasked with executing a carve-out, or businesses contemplating a carve-out is this: Carve-outs are hard, and you need an advisor that has done it before. The vast majority of companies have no internal expertise with this kind of project. This is not their fault, carve-outs are highly specialized activities and businesses don’t do them very often.

I am available for interim carve-out advisory engagements. If interested, please contact me at stephen.mcnamara@onetoonecf.com for an introductory discussion.

Exclusivity is giving a single advisor – or a single advisory firm – exclusive control over the negotiation, the search for potential buyers, and the overall process of selling a company.

Within the world of commercial sell-side and buy-side advisory, there are different types of advisors. You can find either Brokers or Professional Advisors.

Brokers

A broker is a person you hire to sell your business in exchange for a percentage of your business. In this case, you will not give any exclusivity and the process will not be confidential. The broker will spread the word that your company is being sold because that is what you have commissioned them to do, and very quickly the whole market will know about it.

You may even think that by having more than one broker you will get more and better offers, but this is a serious mistake. Two brokers may claim that they have found the buyer, creating an unresolvable conflict.

The broker is in charge of indiscriminately launching the sale offer to the market. They look for a buyer, and they will find one, but not necessarily the best one or the one who can pay the most for your company. It is in the broker’s interest that the transaction proceeds as quickly as possible so they can collect their percentage.

“Remember that a Broker will look after their profit more than yours”

Professional Advisors (Sell-Side and Buy Side)

Professional Advisors bring enormous added value that directly benefits you in the sale of your company. They carry out a properly planned, organized, and structured operation from start to finish, with confidentiality assured.

Granting them exclusivity means that they contact not the first buyer that comes along, but those who are interested in buying your company and can pay the best price, while assuring you that they can afford to pay. A professional advisor has the necessary knowledge to recommend to you not to sell at a certain moment if they believe that the offer is insufficient and that they can obtain a higher price.

Their mission is to protect the business owner and prevent the possible loss of value of the company during the sale process, which can happen if the sale process is disclosed indiscriminately. A professional Advisor will ensure complete confidentiality, as this can have a positive impact on the final sale price.

Likewise, an Advisor will not contact anyone you do not want them to. A broker cannot guarantee that, as their offer is indiscriminate.

A Professional Advisor will always try to get the best price for the sale of your company, even if that means waiting for the right offer”

The importance of confidentiality in the sale of a company

As we have said, granting exclusivity to an advisory firm has a major benefit for you: it guarantees confidentiality. But why is confidentiality so important? For the simple reason that if word gets out that the company is being sold, it could reduce its value. This will hurt the final sale price. You may also not want your competitors to know about the sale of your company.

If you do not grant exclusivity you cannot enjoy confidentiality. You can not expect several brokers to compete to find a buyer and at the same time do so confidentially.

Ensure the confidentiality of your advisory team by signing a Non-Disclosure Agreement (NDA).

The benefits and value of having an advisor in the sale of your business

Once you have contracted a firm specializing in the sale of businesses, they will assign a team of between four and six people to the sale of your company. This team could be bigger if the process is carried out at an international level and the firm utilizes offices in different countries.

Once the sales process gets underway, this is where you will see the value of giving exclusivity to an advisor and the time and resources they dedicate to:

• Carry out a company analysis.

• Prepare documentation: information memorandums, blind teasers…

• Carry out a company valuation.

• Conduct a database and market analysis.

• Find companies across the world that could have synergies with yours. This involves analyzing their financial statements and past acquisitions.

• Discard those that don’t fit: Determine the decision-makers in those corporations and find their contact details, a job that takes hundreds of hours.

• Contacts: The heads of businesses interested in purchasing your company are contacted. The opportunity is explained to them and they are sent all the necessary documentation: blind teaser, NDA and Information Memorandum.

• Negotiation: Here begin the requests for a host of information about your company in all different formats, a cross-checking of data, meetings, and visits that can last for weeks and culminate in an Indicative Offer. This process is repeated depending on the number of companies being dealt with.

After all of this, the advisory team will have committed more than 1000 hours of work across analysts, managers, database teams, search teams, directors, and partners. And at least 50% of the work remains until the transaction closes. The sales process can take time and the end of the operation comes with the closing of the transaction.

Professional advice on the sale of your company

A professional firm specializing in sell-side and buy-side advisory, with trained and experienced advisors, cannot take on the project of selling your company and making such an investment into it without a reasonable expectation of getting paid for it.

“For your professional advisor, your profit on the sale of your company is their profit. Their incentive is that the more you earn, the more they earn”

To ensure this optimal outcome, all serious advisors require a period of exclusivity. In return, they will work with the tireless commitment of their teams of experts in accounting, finance, negotiation, strategy, legal, and tax, including advisors across international offices.

All this dedication deserves your loyalty to your advisors in return. Your relationship with them should be based on trust and transparency. They will work exclusively for you so that you get the maximum benefit. 90% of their remuneration will come from the closing of the transaction. Therefore, maintaining a relationship of trust and reciprocity until the closing of the sale is vital, both for your interests and theirs.

Avoid risks by giving exclusivity to an advisor who specializes in sell-side and buy-side advisory

If you are considering the sale of your company, the best option is to give exclusivity to an advisor with real experience and work with them professionally.

They will help you prepare the company for sale, and decide on the best way to approach and which candidates to contact. They will devise the best strategy for your interests:

• Taking the process seriously.

• Preparing robust documentation.

• Valuing the company.

• Identifying which companies would fit as buyers.

• Finding the ones that can pay the most.

Giving exclusivity to an advisor who works for you as part of your team, and has a commitment on both sides, prevents you from making mistakes. It also substantially increases the chances of selling the company and getting you a much higher price.

“Only professional advisors can create a competitive process and negotiate the different offers for the sale of your company, guaranteeing you the best result”

When you start the process of selling your company, you may encounter brokers who will tell you that they can work with you on a non-exclusive, success-only basis and that you will only pay them if they succeed in selling the company. This is a serious risk. This type of broker will work only to close the deal at whatever price, as quickly as possible.

You will sell your company only once. Turn that transaction into a reward for a lifetime of job and wealth creation. You only need patience and the best professional advice.

ONEtoONE Corporate Finance is a global investment banking group with 200+ M&A Advisory specialists in over 30 countries and 50+ cities worldwide. They have advised on over 2000 successful M&A transactions, with >70% being cross-border deals.

Contact:

Stephen McNamara has over 15 years experience in Corporate Strategy, M&A, and Investing. He is currently a Senior M&A Advisor with ONEtoONE Corporate Finance. If you are interested in buying or selling a business or investing, please feel free to email: stephen.mcnamara@onetoonecf.com. All correspondence will be handled with utmost confidentiality.

This was the second major announcement about Fannie Mae and Freddie Mac in the last two weeks, and investors should take note of the change in tone. In the first announcement, President Trump said “I am giving very serious consideration to brining Fannie Mae and Freddie Mac public…and will be making a decision in the near future”. Now note the above post: “I am working on taking these amazing companies public”. In other words - President Trump’s decision has been made and the conservatorships will end on his watch (i.e. by the end of 2028). I didn’t expect my previous analysis to get validated so quickly, but I’ll take it.

Now the major questions become (1) What needs to happen to achieve President Trump’s objectives? and (2) How much are Fannie Mae and Freddie Mac worth?

I’ll address these questions in reverse order, with this article focusing on updating my price targets. I build on my prior content and cover valuation methodology (including a review of Pershing Square’s methodology), shareholder dilution and my price targets for Fannie Mae and Freddie Mac. The details are behind a paywall (paid subscribers can continue reading). Suffice to say, the shares are up ~600% in the last 12 months and I think they still have massive upside potential. Free subscribers should consider upgrading to paid for this one - the potential upside on these stocks is huge. It might be the single best investing decision you’ll make.

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Deal size >$1 billion

There was only one deal over $1 billion that closed last week. And it is technically a stretch, as the deal was for $600 million and another $1.3 billion pending certain performance milestones related to clinical development. I’m referring to Sanofi’s acquisition of DREN 0201, in a $1.9 billion acquisition (per the terms above). The deal is for a drug in clinical development that would boost Sanofi’s immunology portfolio. DREN 0201 (now rebranded SAR448501) targets immune related diseases such as Lupus and, as you can tell by the name, is still in clinical development. Dren Bio (the parent company that developed DREN 0201) will continue to operate as an independent entity, and use the proceeds to further develop their pipeline of antibody therapeutics.

Deal size $500 million to $1 billion

n/a. There were no deals in this size range that closed last week. Its the first time this has happened since I started writing my M&A news section. What can I say…maybe the holidays did have an outsized impact on the M&A markets.

Deal size $100 million to $500 million

I have to admit that I don’t typically follow the crypto / bitcoin news that much. But the following deal caught my interest. Ursalpha Digital Ltd, registered in the Virgin Islands acquired Cango for $352 million. Cango is a Chinese firm headquartered in Shanghai (though listed on the NYSE) that originally specialized in car financing. In November 2024 (7 months ago), Cango pivoted to Bitcoin mining with a major acquisition of crypto mining equipment (all of which was outside of China, as cryptocurrency mining is illegal there). They, in effect, exited their original car financing business to focus on crypto. Ursalpha Digital is a subsidiary of Bitmain, one of the largest Chinese cryptocurrency miner companies, again based outside of China for legal reasons. With this acquisition, Cango will exit its legacy car financing business entirely as well as the Chinese market entirely. They intend to relocate their headquarters outside of mainland China though no location has been announced yet. Originally, I thought this might be a form of capital flight from China, but that does not seem to be the case here. Rather it is a strategic pivot into Bitcoin mining that has invited the dealmaking spirits.

Deal size $50 million to $100 million

For deals in this size category, we go to the world of luxury watch retailing with The Hour Glass Ltd. (a Singapore based luxury watch retail group) buying THGrau (Australia) for $58 million. The deal took some research to unpack, as technically THGrau is a Australia based Special Purpose Vehicle with limited disclosures. However, it seems THGrau was a holding entity for prime retail locations, and the acquisition could significantly expand The Hour Glass group’s retail locations in the country. This could be good for fans of Rolex, Patek Philppe and Hublot brand watches known to be sold by The Hour Glass group.

Deal size <$50 million

Once again, dealmaking in this size category was sparse and of the deals identified only two were cross-border transactions. The most curious one was Taiwan based WW Holding’s acquisition of Vietnam based Virtue King for $3 million. WW Holding is a specialized manufacturer of luxury, sports and luggage bags. It owns 4 subsidiaries: Wilson Bag (focused on luxury, business and sports bags), Wellpower (focused on sports equipment / protection gear and medical protection gear), TWT (specialized in luggage and business bags) and now Virtue King which is specialized in Golf bags. WW Holding’s strategy since 2009 has been focused on expanding their manufacturing footprint in Southeast Asia, and this acquisition of Virtue King (including their Vietnam based manufacturing facilities) fits squarely with this approach.

That is it for the week. As I said before, dealmaking was pretty sparse this week. Hopefully there is more action in the week ahead. To me the most interesting deal this week was the Cango / Bitcoin deal. I don’t typically pay much attention to the crypto world, but it sure is interesting to see an established car-financing company abandon their legacy business, pivot to crypto and then leave their country of origin as a result (all within 7 months).