“A successful exit requires one really willing and able buyer plus at least the perception of another one,” a seasoned investment banker once told me. In 2014, Fox made an all-stock $80B offer for Time Warner. Jeff Bewkes rejected it not because he thought it was a bad offer, but because he correctly assessed that no other company was able to compete at that level at that time (it was bought by AT&T two years later for $85B).
I thought about that principle last June when on-again, off-again acquisition talks between Skydance and Paramount reached a stalemate, driving Paramount’s enterprise value down 10% to ~$20B.
Ultimately, Skydance reached a deal that implied a $23B valuation for Paramount. By the end of the process, even though 58 potential buyers had been contacted, Paramount’s prior owners were essentially negotiating against almost no ‘willing and able’ alternatives.