Hybrid M&A single-asset deals are the latest iteration of GP‑led transactions to gain popularity in the market, in part because of how the valuation from the M&A deal with the third-party sponsor can be used in the parallel continuation fund transaction. To realize those meaningful benefits, however, sponsors need to prepare to navigate some of the complications arising from a process that involves several transactions with different timelines and mechanics that flow through to certain key deal terms. Those and other facets of hybrid M&A single-asset transactions were discussed by Kirkland partner Eric N. Fischer and his colleagues at the recent Kirkland Liquidity Solutions Academy. This second article in a two-part series summarizes factors that sponsors need to manage throughout the hybrid M&A deal process, as well as potential sticking points that can crop up along the way. The first article
highlighted underlying secondary market trends; high-level features of hybrid M&A transactions; notable potential structural variations; and unique advantages the deals can offer. For more from Kirkland partners, see “Emerging Trends in the Evolving Continuation Fund Market
” (Jul. 12, 2022); and “A Comparison Between Two Liquidity Solution Tools: Preferred Equity and NAV Facilities
” (Oct. 13, 2020).