Buying a company or selling a company is a major undertaking for all involved, including owners, shareholders, management, employees, and all other stakeholders. It is intense, time-consuming and can be costly if not done well. Additionally, it can take months or longer depending on the size of the transaction.

To ensure maximization of value and key objectives being met, an investment bank and its team of trained professionals is retained. This team will provide comprehensive financial analysis of both the company and/or targets, estimate a range of possible valuations, prepare all materials needed during the buy/sell period, and oversee the interaction with the seller/buyer on the other side of the deal. In the end, hopefully a solid mix of value maximization, terms, speed of execution, and certainty of completion on all aspects of the deal come together.

In general, the process will go through four stages. Each has a specific purpose and end game. All of them line up to achieve the main goal of buying/selling. To be very clear, whomever you choose to help you buy or sell, make sure they have a systematic, well managed, machine-like process that has been proven over time, industry, size, and market. Without such a process, something will be missed and that can be very costly both in time and money!

Part 1: Preparation (1-2 months)

You will/should spend considerable time interviewing and understanding what your investment bank has to offer. (See the piece on Five questions you must ask your investment banker/advisor.) Since this will be your team for approximately six to 12 months, you should have a good deal of comfort with the team with whom you are dealing. Once satisfied, you will sign an engagement letter.  Other investment banks may call this a services proposal.  Work will then begin on the following:

Deal Objectives: Along with signing an engagement letter, there will be detailed discussions as to what you want to achieve with your acquisition/sale. Are you looking at a broad spectrum of targets or are you more interested in a focused approach? How confidential do you want/need the process to be, as doing these deals can have a huge effect on suppliers, clients, and employees, to name a few constituents?

Are you looking for a strategic buy/sell, someone who has like business directions, or are you looking for a financial buyer, someone who will add to a portfolio of businesses or is looking to add to their roll up platform? Are you interested in domestic options only or does international play a role in your decision? All these questions and more will be important decisions as to the direction of the process.

Due Diligence: Your investment bank team will spend considerable time doing a deep dive into all aspects of your company. Considerable time will be spent with the appropriate key players in the company; owner(s), key management, stakeholders. This group will be interviewed, and all data scrubbed to determine current state of the business across all aspects (financial, sales/marketing, operations, etc.), what the goals for the deal are, and what will be the key story points in the transaction for the prospective buyer/seller.

At the same time, your investment bank team should be offering advice as to the optimal path to take and any changes that should be made in direction. Estimated valuation ranges of both your company and/or the estimated valuations of the targets will be a key part of the due diligence.  These estimates should not be confused with formal valuations.

Prospective Targets: From the objectives and the due diligence will come a set of attributes that the targets should have. Attributes such as strategic fit, potential synergies, financial status, management experience, and more will be key in building the target list. This list will typically include both strategic buyers/sellers, those who are in the same or similar business who can be value add, and financial buyers/sellers–those who are adding to or divesting from their portfolio of businesses. This list should be robust in meeting the criteria for the deal. Finally, this list will be approved by you.

Marketing Materials: These materials are the information package for prospective targets. They supply the introduction and beyond in helping a buyer/seller know who you are and what you are trying to achieve. Two main pieces of marketing will be developed. The first will be a “teaser” or initial memorandum and is generally used by both buyers and sellers. It has basic information and is designed to garner enough interest to motivate the target to go to the next step. The teaser is a succinct review of your company, and while giving enough detail to be enticing, will not give away company names or other pertinent detail.

The second and main marketing piece is called a Confidential Information Memorandum (CIM). While this document is mainly used in selling your business, variations on the theme are used in buy side transactions as well. The CIM is an in-depth document of considerable length (40 or more pages, and in smaller deals could be in the form of Power Point slides) that contains information on strategies, industry, company, operations, potential areas of growth, financials, and beyond.

Legal Documents: The key document here is called a non-disclosure agreement (NDA) or a confidentiality agreement (CA). This is a legally binding document between you and the potential target buyer/seller. It includes items such as terms, use of information, permitted disclosures and more. In most all cases, for a prospect to receive the CIM they must execute a CA. Your investment bank team will/should handle the negotiation, execution, and distribution of all materials and documents.

FOCUS Investment Banking is a trusted name in M&A advisory services with a nationwide footprint and a global reach. Our experienced team of bankers have helped hundreds of business owners sell their company, expand via acquisition, or raise capital. Learn more about our experience.


John W. Grady, a FOCUS Managing Director located in Austin, Texas, has executive and operating experience in consumer goods, pet/animal goods, hospitals/medical practices, franchises, computer hardware, enterprise software, telecoms, outsourced sales services, digital marketing, sales and marketing management, and agencies. He serves FOCUS clients across many industries with merger and acquisition opportunities, with a special focus within Texas.