Buying Carve-outs for Future Exits

Joe Covey, a serial CEO and acquirer, and investor since 1992.

Matthew Davidge, the co-owner of the NBC Affiliate WVNC (Watertown, NY) and several other stations around the country.

In big companies, some business units may not perform well and might be overlooked. It can be helpful for the company to find a more suitable owner for these units. At the same time, buyers can take advantage of these opportunities to improve the businesses and maximize their potential.

In this episode of the M&A Science podcast, we will explore the experiences of Josh Covey, a successful CEO, acquirer, and investor, and Matthew Davidge, co-owner of NBC Affiliate WVNC, as they buy and develop these businesses with the goal of exiting in the future.

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Episode Timestamps

00:00 Intro

06:43 Buy-side carve-out deals

10:35 Key approach to due diligence

11:52 Unbinding a company

13:51 Why carve-outs are difficult

15:41 Conversations with the right people

19:05 Key things to consider when doing a carve-out

22:58 Walking away from a deal

23:59 Considerations in the carve-out model

26:32 Challenges on the buy-side of carve-outs

27:58 You have to surround yourself

30:21 Evolving the operating model

34:37 The right time to exit

35:55 How working with an investment bank is different

37:48 Bank process vs. Proprietary deals

39:21 Key lessons

40:55 Timing

42:14 Communications

43:34 Alignment on post-close operations

45:27 Advice for first-time sellers

47:57 Negotiation considerations

49:59 Craziest thing in M&A