Buy Side M&A
A Look at the Buy Side M&A Process
SEA provides investment banking services to entrepreneurial companies with revenues of $5 million to $100 million, with an industry focus on Life Sciences, Business Services and Manufacturing & Distribution sectors. Our tailored process is the same investment banking process that bulge bracket Investment Banks use for large national and international companies.
SEA’s Three-Step Buying Process
Step 1 has two parts. In Part One, we develop the one-page Acquirer Profile (or “AP”), and the Confidential Prospect Scorecard (or “CPS”). In Part Two, we assemble a list of 100+ potential sellers, strategic acquisition candidates vetted by our Client. Many may not be considering selling, but we like to cast a wide net in order to obtain referrals to additional sellers we hadn’t considered.
Once we have the assets from Step 1 in place (AP, CPS, and Buyer List), we reach out to the CEOs of the companies on the target Seller List with the AP. Often, we need to reach out several times, and if the CEO isn’t responsive, we’ll try contacting the CFO or a Business Development person.
This is Step 2 and it culminates in one-on-one management meetings to a handful of prospective sellers that meet the criteria established in the CPS who have signed a mutual NDA, and have shown interest in learning more about the Acquirer. (Importantly, you can always reject any prospective seller at any point in the process.) Prospective sellers visit the Acquirer to make sure the fit is right for the company they have built. About two weeks after the meeting, we submit IOI’s to companies that score highest in the CPS. Two weeks later, you pick the winner and we negotiate the LOI.
Step 3 is all about due diligence, drafting the purchase agreement, and getting the deal across the finish line.
Buy Side Facts
- It’s a process. It takes time. If someone tells you it’s an easy process, or a fast one, they’re not being honest with you.
- Time kills deals. Per the above, it’s a long process. Slowing it down for any reason is to be avoided at the cost of deal fatigue, and unexpected exogenous factors that can ruin or postpone a deal indefinitely. This race is both a marathon and a sprint at the same time!
- Culture is a big deal, for both parties. If the cultures of the buyer and seller don’t align, the post-integration merger is doomed.
- The only way this gets done is as a team. One of our company’s core values is, “Remember, M&A is a team sport.” That means working closely with you, the entrepreneur, and also your other trusted advisors (accountants, lawyers, wealth managers and so on). This is a highly collaborative process and we email or speak with our clients nearly every day throughout the process, and we speak with prospects every week (or more) throughout the process.
- It’s very emotional, especially if it’s the first time. If you don’t believe it, read some of the interviews we’ve conducted with other entrepreneurs who have exited. Whether buying or selling, it can be an emotional process.
- There are numerous challenges throughout the process. We anticipate challenges in advance and will help you navigate through them to a successful close.