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Date Submitted: 03/08/2014 08:26 PM
The M&A Sales Process
FINA 6222: Mergers and Acquisitions
Agenda
Auction Process Overview Organization and Preparation First Round Second Round Negotiations and Closing
• Stakeholders • Broad vs. Targeted Processes
• Valuation and Due Diligence • Marketing Material and Confidentiality Agreement Preparation
• First Buyer Contact • Initial Bids and Buyer Selection • Management Presentations and Data Room • Final Bids • Evaluate Bids and Select Winning Bidder • Financing and Approvals
Process Map
Seller Retains Advisor and Signs Engagement Agreement Advisor Performs Internal Due Diligence Advisor Prepares Marketing Materials Advisor Approaches Prospective Buyers
Interested Buyers Sign Confidentiality Agreement
Interested Buyers Receive In-Depth information and Submit a Bid
Seller and Advisor Choose Participants in Second Round
Management Presentations and Buyer Due Diligence
Second Bids Submitted
Price and Sale Agreement Negotiated
Deal is Closed
Stakeholders
Seller Incentive: Highest Multiple
• Private Equity Fund • Large Corporate Entity • Entrepreneur
Advisors
Incentive: Highest Fee
• Investment Bank • Legal Counsel • Auditors and Consultants
Buyer
Incentive: Lowest Multiple
• Private Equity Firm • Large Corporate Entity
Auction Process Overview Organization and Preparation First Round Second Round Negotiations and Closing
Broad vs. Targeted Processes
• Broad Process
• • • • •
20/20 rule: generally, 20% of the deal value should not be greater than • Targeted Process 20% of the • Buyer universe is limited to strong strategic fits prospective • Buyers are likely aware that the company is in play buyer’s current • Financial resources are vetted to a greater degree fund
Maximize universe of buyers approached Approach both strategic and financial buyers Designed to maximize competitive dynamics Requires relatively organization and marketing Confidentiality is more of a challenge
• Dual-track...