Attracting an outside investor who would inject equity into a business or undertaking business succession and selling a company create unique circumstances to a business owner due to subject complexity and lengthiness of planning and execution. For most business owners involved in such a process, this would be their first encounter with an M&A deal. This complex process is often associated with high stress, high expectations and time pressure.
We offer business owners opportunity to overcome transaction difficulties thanks to our holistic and comprehensive approach to M&A transactions. We have extensive experience and a wide team of proven and loyal associates (transaction and investment experts, lawyers, tax advisors, financiers, valuation and succession experts) who are able to create added value to a seller and its business. We share knowledge and contacts, and at the same time we are always discreet and professional.
We raise growth capital
Succession though exit from the business
How do we work with clients?
Strategy & Plan for the M&A transaction
At first our team formulates an overall strategy for business owner’s exit and then gets into details by developing a detailed step and time plan for the transaction (which usually takes between 6 – 12 months), which outlines individual actions to be undertaken, such as: company valuation, transaction marketing, list of potential buyers, confidentiality agreements, process letters, due diligence investigation (financial, tax and legal etc.) as well as the optimal structure and form of the M&A transaction. We manage the course of the entire transaction; in addition to technical matters, we handle investor communication and make sure a business owner and a buyer develop good, working relation in the spirit of a future successful transaction.
- Suitable legal form – legal form of a transaction generally will depend on founder’s personal preferences for asset ownership after transaction and founder’s vision for a company to be sold. While choosing a suitable legal form for a transaction, we pay special attention to how a founder plans to manage and invest personal assets but also how these assets shall be inherited by family members. For example, a family foundation may have many advantages to a business owner because it creates economically rational conditions for securing and managing personal assets with consideration of family interest.
- List of potential buyers – a long list of investors is an important element of building value in a transaction, because it “gives a chance to obtain a higher price, especially if it leads to negotiations with several investors who will submit competitive proposals.” Despite this obvious statement, we also understand how important it is for each founder to choose the best possible investor for a company – every business owner who plans to exit the business wishes to leave the company in good hands, preferably without worrying about its growth prospects and future of its employees.
- Company Valuation – it is a sales price for a business, which reflects fair market value of the company that can be expected to be paid by an outside investor in a marketable M&A transaction. The actions we take are the key to transaction because they enable us to test founder’s price expectation on one end and price attractiveness to potential investors on another. Thanks to our versatile approach to valuation, we are able to determine the optimal sales price range, which is usually higher than the initial founder’s expectations. To determine a realistic, achievable sales price theCFO team will:
- analyse the company’s business model,
- analyse historical financial data and identify necessary EBITDA and net debt adjustments,
- assess company’s business plan for the next 3-5 years and how it may impact sales price or payment terms,
- identify non-operating or private assets, which may be carved-out from a transaction, and
- analyse transactional multiples achievable in similar transactions.
Marketing and transaction initiation
theCFO team prepares marketing materials in a manner that shows a business in a professional and convincing manner in order to draw investors interest. We contact long-listed investors and encourage them to participate in the process – as part of this we identify investors who have the strongest motivation to acquire our client’s business. This is a very important element of building transaction value, because “while carrying out transaction marketing, we try to effectively reach as many potential buyers as possible, whom we encourage to a possible transaction based on a transparent, credible and attractive message“.
Managing due diligence (“DD")
Once non-binding offers have been obtained from potential buyers and a preferred investor selected by our client, we stay in a “dialogue” with an investor and its advisors regarding issues and risks identified during due diligence investigation in order to stay in control of a transaction and also to safeguard company’s valuation and anticipated transaction key terms.
Negotiations and transaction execution
Negotiations can and most often will make for one of the most sensitive and challenging transactional steps, for which we prepare a right strategy. On behalf and with participation of our client, we conduct discussions and negotiations with investors from the very beginning i.e., from establishing the initial contact through to completion. The difficulty of negotiations is not only in legal or technical details but also in emotional dynamics between a business owner and an investor. Success of a transaction will depend not only on a purchase price or payment terms; non-financial issues that play a role often relate to how a business will be managed after a transaction, composition of a future management team and role of an founder in a company, non-compete expectations by a buyer or buyer’s views on company’s growth strategy after an acquisition. It makes sense to appoint M&A adviser who acts as objective expert and who can stand behind a founder throughout negotiations, especially while setting up negotiation boundaries and red lines. This is an important element of transactional success, because “defining a negotiation strategy, its boundaries and the red lines and writing them down brings a larger picture view to a founder in terms of negotiation priorities, which will make negotiation decisions simpler, faster and in the end more successful”.