BUYING
Are you interested in acquiring companies?
Our 6-step process can help you identify high potential acquisition targets and ensure completion of a successful transaction. By searching broadly and evaluating thoroughly, we identify targets that meet your specific acquisition criteria. In every step of the process, we maintain the highest level of document security and communication confidentiality to protect your interests.
OUR 6-STEP BUYSIDE PROCESS
Step 1: Assess
Assessing your acquisition criteria is the essential first step of an effective target search. We guide you through the development of your acquisition criteria from highest priority “must haves” to lower priority “should haves.” Search criteria can be as broad or as specific as you require and can change over the course of your search, but typically includes:
- Product or service type and customers or markets served
- Level of historical revenue and earnings
- Growth opportunities and potential synergies
- Geographic location
Deliverable: Your detailed acquisition criteria
Duration: 1 to 2 weeks
Step 2: Search
Identifying targets that meet your acquisition criteria requires searching for companies that are both for sale and not currently for sale. Many of the best acquisition targets are often not on the market at the beginning of the acquisition process. An acquisition target that meets your criteria can often be found by searching for:
- Privately held companies with owners approaching retirement age
- Subsidiaries of public or private corporations that can be divested
- Underperforming product lines or divisions
- Companies located in other countries
Deliverable: List of potential target companies
Duration: 2 to 4 weeks
Step 3: Contact
Target companies are initially contacted by us to introduce the idea of joining a larger group, forming a partnership, and transferring control. Once their interest is confirmed, we coordinate the collection of information under a strict confidentiality agreement to gain an understanding of:
- The quality of a company’s operations and management
- How they have grown and plan to grow revenue and earnings
- What shortcomings and constraints they currently face
- How they will add value to your company
Deliverable: List of interested target companies
Duration: 1 to 2 months
Step 4: Evaluate
We evaluate a short-list of potential target companies that meet your acquisition criteria based on the information collected from the company and from external sources. You will receive our detailed analysis of each company with a focus on:
- The quality of a company’s operations and management
- How they have grown and plan to grow revenue and earnings
- What shortcomings and constraints they currently face
- How they will add value to your company
Deliverable: Pitchbook presentation on target companies
Duration: 1 to 2 months
Step 5: Offer
Following introductions, conference calls, and on-site meetings, you may require additional support on the development of an offer. We can assist you in all facets of creating offer terms that will lead to a successful transaction, including:
- Review letter of intent and definitive agreement terms
- Analyze the earn-out structure and what-if scenarios
- Recommend employment and non-compete agreement terms
- Support development of transition budget and plans
Deliverable: Fully executed Letter of Intent, Term Sheet of Indication of Interest
Duration: 1 to 3 months
Step 6: Close
The due diligence process can be a daunting one. Many deals die as a result of issues arising just prior to close. Emotions run high and the pressure to close on-time runs higher. We continue to work with you through the closing to resolve all potential deal-killing issues. Our track record for successfully closing deals is a result of our:
- Experience in buyside and sell side due diligence
- Relationships that we build with target companies
- Meticulous financial analysis of the target
- Development of clear expectations on both sides
Deliverable: Fully executed definitive agreements
Duration: 1 to 3 months after completion of due diligence
CASE STUDIES
Take a look at some of our most recent buyside engagements and let us know if you are ready for Exit Experts to use our 6 step process for qualifying high potential acquisition targets for your organization.
FREQUENTLY ASKED QUESTIONS
Many of the best acquisition targets are not on the market and not currently for sale. However, many private business owners will consider joining a larger group to take advantage of broader selling opportunities and access to growth capital. They also realize the advantage of converting part of their equity into liquidity, even if they are not ready to retire anytime soon. We approach business owners to determine their level of interest in building their business more rapidly with support from a larger group. In order to establish a trusting relationship, we must be clear from the onset about the buyer’s intentions for the company post-acquisition, including retention of management and employees, relocation of the operations, and potential divestitures of product lines.
Even if your company has a business development or M&A team, they are often fully occupied with the integration of recent acquisitions, due diligence/negotiations on active deals, or contact with a number of targets. We are an extension of your existing people and processes that can significantly increase your potential for finding high-quality acquisition targets. We search broadly and deeply for companies that you may not have identified or have not been able to receive a response from. Company owners trust us because of our M&A experience, strong reputation, and extensive knowledge of our focused industries. We always get a response from companies that we contact and often are able to make introductions within 1 week from our initial contact.
We have deep industry knowledge and existing relationships with many companies in our focused industries: packaging machinery and medical device industries. Our founder, Ray Johnson, has over 30 years of experience in starting, building, and operating companies and has successfully sold multiple businesses in these industries. We are uniquely able to approach companies that are for sale and those that are not currently on the market to determine an owner’s level of interest in joining a group. Our industry experience and reputation are often the difference between “not interested” and “would consider” when approaching high potential targets that are not for sale.
Essential to finding unique acquisition opportunities is the ability to search broadly for companies that meet your criteria. This, combined with careful evaluation of target companies will allow you to identify which targets have the highest value targets and are worth investing your time and effort. We have extensive resources for international searching, private company data collection, and determining the value of a company in our focused industries. We use three separate valuation methods including comparison to comparable companies that have been sold in these industries. After a thorough analysis is completed, it is critical to keep a steady flow of communication with potential targets to maintain deal momentum. The phrase “Time kills deals”, is true in M&A and can only be combated by prompt follow up and steady progress on all transaction challenges. We stay in touch with you and with the target companies on a daily and weekly basis to ensure that the transaction continues to progress to final closing.
We often evaluate 50 to 100 potential targets based on your primary product, industry, and geography acquisition criteria. Upon further analysis of each company, we narrow the list down to 10 to 20 companies that best fit your acquisition criteria. These companies are then contacted to determine if there is interest in initiating a dialogue. Typically, we end up with 5 to 10 target companies to present to you as high quality, high potential acquisition targets.