Here are the steps successful Buyers and Sellers follow in M&A deals:
1
Build Your Team
Your Team of Advisers Should Include:
Accountant,
Tax Adviser,
Valuation Expert,
Investment Banker/Broker and an
Experienced M&A Lawyer
2
Gather Information about Your Company and Potential Buyers or Sellers
Sources:
Trade Publications,
Trade Shows,
Industry Organizations,
Networking,
Internet (Websites; Filings; Analysis) and
Talk to Your Team of Advisers
3
Know Thyself
Sellers:
What is your company worth? If you don't know, then
Go Back to Step 2!
How much do you need from a sale?
Financial and Estate Planning are an essential part of this process.
Are you ready to sell? Is you Company ready? Are you mentally and emotionally ready to let go?
Buyers:
What are your Acquisition Criteria?
Target criteria and
Deal criteria.
Stick to your criteria!
Do you have an Acquisition Integration Plan? It is critical to the success of any M&A deal.
4
Identify Targets
Sellers:
Who Are the Potential Buyers? (Strategic and Private Equity Groups).
Research their Plans --
How do You Fit into those Plans?
Contact Potential Buyers (sales call)
Get on their Target List
Buyers:
Who Are Your Potential Targets?
Research Them;
Screen Against Acquisition Criteria;
Make Contact (sales call); then perform
Due Diligence and Screen Again. Feedback loop.
5
Negotiate the Terms
Focal Point: Letter of Intent (“LOI”) --
Buyer’s Goals:
Lock up the Deal;
Cap the Purchase Price;
Open the Door to Due Diligence; and
Introduce "Other Concepts."
Seller’s Goals:
Identify Price and Terms;
Control Due Diligence;
Flush out "Other Concepts"; and
Cap Post-Closing Exposure (Indemnification).
Negotiating Tip:
Seller’s Leverage Is Greatest at LOI, because
The Buyer wants your company and
wants to lock you up to
eliminate competition for the deal.
You are negotiating with Buyer’s Management, who is
motivated to get deals done.
After the LOI, the lawyers take over,
and you know how they are!
Comments - add comment