Before we are officially engaged by a company and accept the responsibility of driving a company towards a successful liquidity event, we take several steps to ensure that we are well positioned to achieve that company’s goals. These exploratory steps are necessary to make sure that the company’s goals are aligned with the market, our resources, and our expertise. Part of this exploratory process is for us to complete an M&A Activity Report that is custom built for that company.
Once we have mutually agreed to move forward and an engagement agreement is executed, we customize and then implement our proprietary 72-step process for the company. The high-level chart below provides an overview of each phase of the 72-step, sell-side process.
Phase 1: Knowledge Transfer -At the outset of this initial phase, we conduct a face-to-face, kick-off meeting with our team of senior principals in order to clearly outline the finer details of the process, the milestones, the deliverables, and the key decision points. Following this onsite meeting, we provide our client with a thorough, customized due diligence list, where we ask the necessary questions in order to run the sell-side process on their behalf. Following completion of that knowledge transfer, we conduct both a SWOT and a Pre-Mortem analysis of the company in order to ensure our marketing vision is aligned with theirs prior to us beginning the creation of the marketing collateral in Phase 2. When appropriate, we also assume a more consultative role in completing a Value Driver Check List that identifies immediate areas of opportunity that our client can pursue, in parallel to this 72-step process, that will help ultimately maximize value and structure at eventual exit.
Phase 2: Collateral Creation -When creating the documentation that will eventually be used to make a first impression with prospective buyers, our senior principals leverage the best practices and standards that they utilized during their Wall Street backgrounds. The core marketing collateral consists of: a Blind Profile, a Confidential Information Memorandum (often 40+ pages), a detailed, five-year Financial Projection Model, and Management Presentations. Our marketing collateral is known for being extremely thorough and customized for each client. During this collateral creation, we also set up various technologies/solutions for the benefit of our client, such as a secure virtual data room. All marketing collateral is pre-approved by our client before being distributed to prospective buyers (see Phase 4).
Phase 3: Buyer List & Go-to-Market Strategy - During this phase we leverage our extensive buyer and referral network to compile a comprehensive list of prospective buyers. Depending upon our client’s goals, we will pursue domestic and international as well as financial and strategic buyers. Once the buyer list is populated, we procure the contact information of each buyer's key decision makers. This buyer list is pre-approved by our client before being populated into (and tracked by) our customer relationship management software. To complement our buyer list, we also create a Go-To-Market Strategy and Buyer Process Letter, which outlines the key dates and deliverables that will be required by each interested buyer that is interested in participating in the process.
Phase 4: Buyer Outreach, Indications of Interest, & Letters of Intent - Here's where we proactively begin our outreach to prospective buyers. Blind profiles are distributed to targeted buyers within the buyer list, in either a shot gun approach or a tiered approach, depending upon the Go-To-Market Strategy. As prospective buyers express interest in learning more, we require Confidentiality Agreements to be signed. Once these Confidentiality Agreements are signed, we distribute the Confidential Information Memorandums and our Buyer Process Letter to each buyer. As part of this Process Letter, it dictates when buyers must submit their initial Indications of Interest (or Non-Binding Offers) as well as what information is required in their Indications of Interest. Upon receipt of these offers, we run various analyses and channel checks to filter out the “contenders” from the “pretenders”. We then invite a subset of interested “contender” buyers to the next round, which will include access to the virtual data room as well as onsite, management meetings. Following these management presentations, we will receive binding Letters of Intent (LOI) from interested buyers. All buyer interaction is documented in our CRM system, for the benefit of our client.
Phase 5: Exclusive Buyer Dilligence -Upon receipt of the LOIs, we conduct a significant financial modeling exercise, analyzing the viability of each LOI (based on our client’s goals). We also diligence various aspects of each bidding buyer in order to factor in the more qualitative aspects of the offer (in addition to the quantitative aspects previously referenced). We ultimately select one LOI and execute it, often committing to somewhere between 60-90 days of exclusive due diligence with that buyer. Our team proactively manages the due diligence process so that our client can focus the majority of their attention on running the business while the buyer conducts both the discovery and confirmatory diligence items necessary to close.
Phase 6: Closing -In concert with our client’s legal resources, we help negotiate and structure the terms of the Sale/Purchase Agreement, the Non-Compete/Non-Solicitation Agreement, and any other pertinent agreements. If applicable, we also help value, negotiate, and structure an Employment Agreement(s). To optimize post-tax proceeds, we assist our clients by collaborating with tax advisers and other financial/legal professionals.