It’s been interesting watching the saga of Spirit Airlines, Frontier Airlines, and Jet Blue. It’s a good example of what happens when a buyer really wants something, aka, buyer fever.
To summarize: it was announced Frontier wanted to buy Spirit and it was all set for a shareholder vote. Then Jet Blue decided to go after Spirit and upped the Frontier offer (public companies where all is disclosed is not like buying or selling a private company where nothing is disclosed to anybody), and it’s been lingering ever since. As of this week, Frontier said they’re “very far” from winning approval from Spirit shareholders because of Jet Blue’s higher offer.
The lesson is, when a buyer really wants something (Jet Blue), they’ll do what it takes to get it. When a buyer likes the deal but doesn’t love it, they’ll walk away (Frontier, saying they will waive their right to match the offer).
And then there’s the terms. Frontier is offering a little cash and a lot of stock. Jet Blue is offering all cash. Cash is king, right? Same in small business sales. While I haven’t been involved in deals where payment is partially in stock, I’ve read and heard of enough deals where the stock went down and the seller didn’t get what they thought (hoped) they were getting.
This shows you how fragile any buy-sell deal can be. There’s a lot that can happen on the way to closing, which is why there are celebrations once it happens.
“It ain’t over till it’s over.” Yogi Berra
“No one has ever doubted that truth and politics are on rather bad terms with each other.” Hannah Arendt