💡 Should a company pay out all retained earnings before bringing in a strategic partner?

One of our clients is currently exploring an M&A deal with a strategic investor.
Before the transaction, they’re considering paying out a large amount of retained earnings as dividends.

Why?
Because if it’s not paid before the deal, the new shareholders would also share that retained profit — even though it was earned before they joined.

That makes sense. But here’s the catch 👇

• The company still needs enough cash to operate smoothly after the payout.
• If cash runs short, it may need to borrow — and that increases interest expenses.
• A higher debt level could also raise the debt-to-equity ratio, which might concern new investors.

So before paying dividends, it’s important to balance between rewarding current shareholders and keeping the company financially healthy for future growth.

💬 What’s your view — should retained earnings always be paid out before a deal like this, or should they stay in the business?

👉 At ORNA, we help business owners and investors evaluate the financial impact of strategic decisions — from dividend payouts to M&A valuation.
📩 Message us if you’d like to understand how these decisions affect your company’s value.

#BusinessValuation #MergersAndAcquisitions #CorporateFinance #ThailandBusiness #ORNAvaluation