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Buying Process
ClearRidge Capital™ Guide to Buy a Company
In this section, we explain how to plan, prepare and execute a successful acquisition, as well as how to handle the integration of the new company post-acquisition.
We only list the bullet points here, but we’re happy to talk you through each particular step.
First of all, make a plan
• What type of business do you have, what capital do you have available and how much risk and leverage are you willing to accept with that capital? What are you looking to achieve, in what timescale, what target size do you have, who do you think the best targets are, what do you need us to do, what M&A experience do you already have? In short, we need to learn who you are, what your intentions are and what you want us to do.
• How much help do you need? We can do anything from simply reviewing your target and offering an opinion on price and terms to running the whole process for you.
• Talk through all your options. Partnership with existing owners, recapitalize and keep existing management, all cash offer, partial cash offer and earn out, stock options, financing and capital procurement, leverage and acquisition price range.
• Agree on goals for the project, timescale and work plan.
• Profile your optimum acquisition targets
Next, get ready to start your search
• Access proprietary and publicly held databases of US companies. Facilitate search by annual revenues, industry, ownership structure, number of employees, profitability, SIC or NAICS codes, geographic location and market. This includes divestitures from conglomerates and private equity groups.
• Research your target industry, identify trends, opportunities and threats.
• Prepare a pitch book on your business, including your credibility as a buyer, industry and acquisition experience and available capital.
• Market to potential acquisition targets (confidentially)
• Plan the best way to approach the target companies: email, fax, mail, meetings, or phone calls.
Get going
• Start generating contact with the list of acquisition prospects.
• Send out letters and summary emails to agreed prospect list.
• Interview the responsive sellers and determine their willingness, motivation, and timeline to sell their company.
• Build the qualified prospect list, after reviewing and screening the targets to ensure they fit your profile.
• Execute a mutual non-disclosure agreement.
• Get initial indications of price expectations.
• Conduct conference calls between you, us and the leading seller prospects.
• Value the target and set a price multiple and likely terms.
Work the sellers
• Arrange site visit for the best targets.
• Lead negotiations and generate verbal offer.
• Generate a Letter of Intent for your favored acquisition target. This is a non-binding agreement, but it is an important agreement that lays out price, terms and an agreed closing date in writing.
• Start due diligence process.
• Request sensitive data on the target to build a complete picture.
Close the deal
• Secure equity and debt to finance the acquisition.
• Finalize due diligence.
• Develop an integration plan.
• Identify and resolve problems.
• Negotiate and execute a binding, definitive purchase agreement.
• Liaise with attorneys, CPAs, tax advisors, and any other professionals.
• Exchange documents, transfer the funds and get the keys.
• Manage the post closing adjustments and covenants.
