The M&A Process
Middle market companies with revenues from $2 million to $50 million which comprise our core M & A work, need and deserve the same level of service that large companies can access. Therefore, our selling process is very similar to what you may expect from a large investment bank. Valuation, packaging, marketing, negotiation, transaction management, and managing expectations are all key elements of a successful transaction. We believe that it is not what you get but what you get to keep that matters most, and by working with your professional advisors, we help you achieve a transaction structure that meets your objectives.
A successful M&A (Mergers and Acquisitions) transaction requires a plan and methodical implementation of the plan. VR plays a coordinating role in eight stages of the transaction process:
Stage 1: Analysis of Sellers' Objectives and Deal Structure
The sellers' motivations for selling and desired time frame need to be understood. The sellers' financial circumstances may determine whether special terms of sale such as seller financing, a purchase price based on an earn-out or equity in the acquirer, or sale of less than a 100% interest will be entertained. The proposed deal structure may be either a sale of assets or a sale of the companys' stock.
Stage 2: Analysis of the Business and Determining Valuation
Setting an appropriate value or range of values is essential to a successful transaction. Sufficient analysis is conducted to assure that neither the client nor the intermediary overlooks important elements of the firms' value. An understanding of the clients' industry, similar completed transactions, and the pool of prospective buyers are considered in determining value. We always recommend validation by a third party to help justify the valuation set and help determine what financing requirements will be needed in order to consummate a deal.
Stage 3: Preparation of the Offering Memorandum
A thorough, accurate, and professional-appearing offering memorandum will be prepared to communicate enough information to prospective buyers to persuade them to enter into further discussions with the seller and the intermediary. Characteristics of the business that add value will be emphasized in the memorandum.
Stage 4: Initial Communication with Prospective Buyers
VR uses a range of communications that include electronic media, mail, and personal contacts to market the business to the maximum number of qualified prospects. The firm will evaluate the financial qualifications and motivations of prospective buyers. All qualified buyers will be required to sign confidentiality agreements and provide financial qualification before receiving the offering memorandum or other identifying information about the client.
Stage 5: Follow-up with Interested Buyers
Buyer questions and requests for additional information will be responded to promptly, while continuing to protect the sellers' time and the confidentiality of the information. Buyer meetings will be scheduled and conducted as soon as all parties are available.
Stage 6: Negotiation of Preliminary Agreements
Continued discussions with interested buyers will be focused on reaching a workable agreement. One of the keys to achieving this is for the intermediary to keep some separation between the buyer and seller during negotiations, while conferring with the client to assure that positions taken in the negotiations are correct. We respond to objections raised by the buyer, drawing upon our experience, to assure that these concerns can be addressed without affecting the value of the transaction.
Stage 7: Due Diligence and Financing
VR manages the due diligence process in a manner designed to make the buyer feel comfortable that all requests for information have been responded to fully while using the sellers' time and resources as efficiently as possible. When needed, we work with the buyer on obtaining financing on competitive terms.
Stage 8: Final Agreements and Closing
We strive to complete negotiations and schedule a closing within the shortest amount of time reasonable. When external financing is involved, we assure that all lender or investor requirements are satisfied promptly. We work with the sellers' accounting, tax, and legal advisors to assure that the transaction is structured and documented properly while conforming to the sellers' objectives and keeping costs under control.