Mergers and acquisitions (M&A) provide organizations, both large and small, with an opportunity to accelerate strategic growth. By purchasing another company, an acquirer can gain access to critical research, intellectual property, human capital, and other assets at a much faster rate than could be achieved in-house.
However, at present, the M&A process is flawed and outdated. When businesses fail, they often take their hard-won knowledge, technologies, and human capital down with them. To date, there has not been an efficient way for sellers to find buyers who can carry the torch of a faltering business. In turn, buyers usually do not have a consistent source of deal-flow outside of their inner circle. Furthermore, even when a buyer and seller do manage to find each other, the process itself is unjustly complex, involving batteries of corporate lawyers, investment bankers, financial advisors, appraisers—all of whom come at a high cost.
#LEXITco will bring increased efficiency and liquidity to M&A transactions, all within one secure space. We do this in the following ways:
1.With a marketplace that brings buyers and sellers together, giving themglobal access to assets and opportunity;
2.Through the addition of assessors and field experts who help appraiseassets;
3.With a secure, digital deal room where transactions are finalized quickly;
4.With an international network of business partners, to extend reachand promote communication;
5.By utilizing blockchain technology, for its security and transparency;
6.And through token economics, to incentivize and drive engagement.
By knocking down the barriers of the past, LEXIT enables M&A transactions to close more quickly, at an estimated quarter of the cost. Simply put, LEXIT aims to make today’s mergers and acquisitions as uncomplicated, seamless, and lucrative as ever by revolutionizing the way these transactions take place. The increased liquidity and market-efficiency will promote innovation and support growth, while reducing costs and risk for all parties involved.
M&A Opportunities and Challenges
Why Do Companies Undertake M&A Transactions?
Mergers and acquisitions allow ventures that are fledging or struggling to find support while giving established companies the opportunity to attain the tangible or intangible assets that enable them to reach greater heights. The acquisition of a local company, specialized start-up, or innovative technology can help an established company enter new markets more quickly than if that company attempted to expand organically.
From the perspective of the acquisition targets, these transactions can provide the financial and legal resources needed to continue their work. For example, a larger company can offer the financial support that a cash-strapped venture might need to survive. In the case of a small company that owns intellectual property, having access to legal resources is essential.
What Are the Barriers to Accessing the M&A Market?
Pricing Is Difficult
One of the most taxing parts of an M&A negotiation is arriving at an acceptable valuation. Buyers want to ensure that they are not overpaying while sellers are naturally angling for the highest reasonable price. Without proper guidance, either end of an M&A transaction could have unrealistic expectations that sour the deal.
Counterparties and Experts Are Not Easily Accessible
In today’s M&A marketplace, a lack of connections can put either side of the transaction at a disadvantage. From discovering transaction opportunities to ensuring the company’s interests are well represented, the old system often requires an inner circle of experts who can guide the process. The system shows its age particularly when it comes to connecting M&A buyers and sellers, with both buyers and sellers often relying on individual contacts to find the counterparties to their transactions. In addition to contacts, the parties can also contract professional services firms for this task.
Transaction Costs Are High
The right guidance is also expensive. Transactional costs represent a significant barrier to M&A participation for small businesses and startups, which are often cash-strapped. A traditional M&A transaction usually takes up to two years to close—from the day the acquirer discovers its target to the day ownership is transferred. The length of process is therefore a major deterrent for those considering the M&A route as these companies must bear multiple years’ worth of transaction costs before receiving any payout.
Intellectual Property Challenges
In addition to the M&A challenges faced by companies in general, there are also a number of issues that are specific to IP-related transactions. Because of the intangible and sometimes inscrutable nature of intellectual property, it can be particularly difficult to discover and value these types of assets.
The LEXIT Ecosystem
The abovementioned challenges are symptoms of an imperfect market. Pricing difficulties, the need for expert guidance, and high transaction costs all contribute to the M&A market’s lack of accessibility. With this in mind, #LEXITco endeavors to break down the barriers to M&A so that even those individuals and companies that, in the past, were not traditional participants can now access the benefits of M&A transactions. We do this via a platform that consists of a Marketplace and a Deal Room and is underpinned by blockchain technology.
The LEXIT Platform: Our Marketplace and Deal Room
Our Marketplace will increase accessibility to global M&A opportunities by allowing sellers of any kind to create auction listings for their companies and IP. Once sellers post their listings, buyers can either browse through all the sell offers or search for offers with specific attributes, like industry or location. After receiving bids, the seller makes the final decision regarding which bid to accept. Buyers can also communicate with sellers before bidding in order to get more information about the listing.
The Deal Rooms
Our virtual Deal Rooms are secured spaces where non-disclosure agreements are signed, terms are negotiated, and transactions are finalized. Since Deal Rooms will hold confidential documents containing trade secrets, robust security frameworks will be used to reduce risk of breach. Traditionally, M&A negotiations have revealed the extent to which a power imbalance exists between sellers and buyers—whoever controls the most resources also controls the deal. In contrast, LEXIT aims to level the playing field by giving all participants the same access and guidance.
The LEXIT Token
As stated, in order to ensure ecosystem alignment, LEXIT is launching a native currency token to be used on the LEXIT platform. Since our ecosystem is heavily dependent on network features such as listings, ratings, and revenue-sharing among participants, the introduction of an internal currency is essential. The LXT token powers the LEXIT platform and its services. Escrow payments, rapid settlements, and cross-jurisdictional transactions between non-acquainted parties use smart contract technology to ensure a secure, trustless environment that can support the high transaction volumes anticipated. By providing LEXIT participants with a native token, we help to mitigate the price fluctuations that would occur if other cryptocurrencies were used.
Each time a seller posts a listing, they will pay a listing fee in LXT. LXT will also be charged for premium features—for instance, increased visibility of a seller’s listing. Users will also be charged LXT to access the Executive Room—an exclusive viewing space that showcases offerings before they are available to the public.