Experienced advisors help you execute an effective M&A strategy.
Buy-Side M&A Overview
An effective acquisition strategy can be a very good way for a business to augment organic growth and create value for shareholders. Often times, it is more efficient and cost effective to acquire another company that brings a new customer base, end market, capability, distribution system, technology, etc. rather than building it organically. An acquisition strategy can turbo charge growth but can also put the core business at risk if not executed properly. Hiring an experienced investment banker can be invaluable in finding qualified acquisition targets with reasonable valuation expectations that are synergistic and accretive to the core business. Through decades of experience, we have the ability to source and screen actionable targets and negotiate synergistic acquisitions that are complementary to the culture and strategy of our clients.
Our Buy-Side Process
Develop the Strategy
The first step is to develop an acquisition strategy that identifies the specific objectives of a transaction and the criteria to be applied in analyzing potential target companies. We collaborate with our clients to define the attributes of a target that would be complementary and accretive to the core business ranging from new capabilities, exposure to a new end market, new customers, cross-selling opportunities, management team talent, new geographic coverage, etc.
Search and Initial Approach
Our proprietary CRM database and industry leading research platforms give us access to many targets that are not currently on the market, but might be amenable to a sale to the right buyer if approached properly. Companies are deluged with calls and emails from investment bankers and business brokers. With decades of experience, we have developed marketing approaches that stand out from the competition and drive higher response rates.
We provide senior level advisory services to our clients in analyzing targets for the strategic fit with the pre-defined acquisition criteria. We conduct preliminary diligence on the targets to understand the margin profile, end markets, customer diversification and technology to screen out unattractive acquisition candidates and ensure that we focus collective efforts on qualified, actionable targets that fit criteria and have reasonable valuation expectations.
Target Selection and Preliminary Diligence
After the initial screening, we use a variety of proprietary diligence tools including our buyout model, target scorecard and diligence checklists to advise our clients in valuation along with risks and strengths of each target. Our experienced bankers know how to develop relationships with targets to get them comfortable with the process and with our client to facilitate a more open dialogue and exchange of sensitive information.
Site Visits and Diligence
At this stage, our role is to facilitate information sharing between the target and our client to make the process as efficient as possible and prevent disruption in our clients’ core business. We coordinate initial site visits at qualified target locations and advise in operations diligence and financial diligence.
Once we have identified a desirable acquisition target willing to engage, we fine tune the valuation model with historical and projected financial statements, quality of earnings adjustments, working capital requirements and an optimal capital structure to determine a valuation for the business. From the valuation and cash requirements, we advise on alternative transaction structures to prepare a preliminary bid.
Negotiation, Detailed Diligence and Closing
Letter of Intent
As part of our buy-side process, we will draft a custom tailored Letter of Intent (“LOI”) on behalf of our client to acquire the target. The LOI includes a set of binding and non-binding terms that serves as a road map for the eventual transaction, including an exclusivity period. By having a written and executed document in place, both sides have more comfort that a framework is outlined before committing substantial time and money on due diligence.
Detailed Due Diligence
Once we have executed a Letter of Intent with an exclusivity period, we launch a detailed legal, financial and operational diligence process with a team of advisors. Our bankers quarterback the process and advise throughout to get complete reports from each functional team. Based on diligence findings, we work with our client to determine the path forward and the potential impact on the terms of the deal.
Negotiation and Closing
We work with legal advisors through the definitive agreement negotiation process to ensure all the business terms agreed to by the parties are reflected in the documents accurately. Additionally, we work with our clients’ advisory team to ensure that diligence findings are properly negotiated into the terms of the purchase agreement. We advise throughout this process to help negotiate deal terms and successfully close the acquisition on terms favorable to you.
Management buyouts require careful navigation and tactful negotiation among the stakeholders. We have advised hundreds of management teams with valuation, transaction negotiation and financing.