Sell side mergers
Prepare executive summary and deal book
The first step is to prepare an anonymous ‘executive summary’ which gives the prospective buyer an anonymous view of your company. At the same time, a detailed company profile (‘Confidential Information Memorandum’, CIM) is prepared, including all relevant details regarding the company. In the first instance, interested companies will receive the executive summary. If further interest is made known, the prospective buyer company will receive the detailed CIM after signing a non-disclosure agreement.
Find suitable buyers for the company
In this step, we continue analyzing which companies in the marketplace are most suitable for acquiring the company. For that purpose we count on our network, data bases and other available resources.
The long list of targets is analyzed and potential partners are selected. Then the targets are contacted. The result will be a shortlist of targets whom we will invite to visit the company.
Company valuation and negotiation process
A value for the company must be stablished, based on different criteria and methods. At the same time it is important to know what the valuation methods of the prospective acquirers, and what is the value they will add to the company.
The letter of intent (LOI) or term sheet
Once the most suitable company to buy the business has been selected, it is necessary to prepare a term sheet or LOI (“Letter Of Intent”). In this document all relevant sales terms are included. The LOI is usually a binding offer.
Due diligence is done by the acquiring company or by external accountants and or due diligence experts working on behalf of the acquirer. Due diligence is executed on financial, legal and other business areas.
In the final phase, the contract will be drawn up by an external legal party. Normally, it is the responsibility of the acquiring company to do this. Corporate Finance in Europe (CFIE) can manage this process from the seller’s side if desired. We work closely together with the seller’s legal counsel to ensure the contract is appropriate for the sellers.
Buy side mergers
Define target profile to buy
After studying the business and understanding the company’s vision and strategy we define the detailed profile of the target company to buy.
Search of targets
In this stage we do a search of target companies that comply with the profile. For that purpose we count on our network, data bases and other available resources.
The long list of targets is analyzed and potential partners are selected. Then the targets are contacted. The result will be a long list of qualified candidates for acquisition purposes.
Contact businesses to buy
Together we validate the long list of targets, and then we contact them. We explain to them the advantages and benefits for them from the acquisition, and we evaluate the capabilities of their management and owners. As a result we get a shortlist of targets. These targets are then visited.
The valuation and negotiation process
We value targets on the basis of agreed methods. At the same time, we will check for a realistic feeling of the expected value by business owners, in order to create a solid ground for continuing the negotiations. If a majority stake is acquired, we mainly focus on the value added of your company, so that the remaining business owner(s) share can be very interesting for them, as a substantial increase may be expected after your company has finished the acquisition.
The letter of intent (LOI) or term sheet
Once we are certain we have found the most suitable target we negotiate a LOI (“Letter Of Intent”) with the candidate to be acquired. In this document all relevant buy terms are included. The LOI is usually a binding offer, linked to the results of the Due Diligence.
The Due Diligence has to be carried out by due diligence experts. Due diligence is executed on financial, operational, legal and other business areas. In this phase, we assure that all items are consistent with the financial statements provided by the target.
The contract to buy a company
This is the final step. The contract will be written by an external legal party.