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 in a sale, 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, determine optimal estimated valuations, prepare all materials needed during the buy/sell period, and oversee the interaction with the seller on the other side of the deal. The goal is to achieve an optimal mix of value maximization, terms, speed of execution, and certainty of completion on all aspects of the deal.

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 2: Go to Market (1-2 months)

Target Outreach: With the approved target list, your investment bank team will begin contacting these potential companies. Typically, this will start with an email of introduction and in some cases the teaser attached. The bankers will/should also follow up with phone calls to determine if the target has interest or not. From this effort will come potential buyers/sellers who want to take the investigation to the next stage. In a sell side engagement, a Confidentiality Agreement (CA) will be sent and executed and the Confidential Information Memorandum (CIM) will be delivered upon receipt.

Management Presentation Preparation: This is a structured presentation given by the sell side of the deal. Both parties will have some variation of a presentation but sell side will be more in depth as the buyers want to glean all they can. Your investment bank team will work with management on the messages, preparation of the potential questions, and answers, who will talk, etc.

This is a crucial second-round meeting as it is the first time the two parties are together and talking versus reading the marketing material. You and your investment bank team must be in synch to make a strong showing here.

Data Room: The term “data room” comes from times prior to the advent of computers, internet, and the cloud. There were actual rooms prepared for interest buyers that stored all the material information needed to determine the specifics of a deal. It would contain the CIM and any/all other details needed for a prospective target to fully understand the business. Details such as a complete list of all clients, their contracts and terms, and more will be there. Similarly, the complete list of suppliers, details of legal proceedings, full organization charts, and job descriptions would be housed there as well. Now, these are no longer physical spaces. Rather, they are virtual “data rooms” your team will set up and oversee.

Initial Bids: Along with the CIM, prospective targets also will be given an initial bid procedures letter. This letter spells out the timing by which a written, non-binding first-round bid must be received. These bids also are called preliminary indications of interest and will have detail as to purchase price, rationale for the price, structural considerations, financing details, etc. Your investment bank team is responsible for receiving, assessing, and prioritizing these initial bids. They will then present the optimal options and give you a recommendation as to which groups to pursue.

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.


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