Six Minute Strategist - Mini Guide to Selling a Company mini guide

John Colley - The Six Minute Strategist http://jbdcolley.com

The Six Minute Strategist

The Six Minute

Strategist

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http://jbdcolley.com



The Six Minute Strategist

Selling A CompanyA Mini Guide

6MS

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6MS


CompanySale

Planning Preparation

PartnersProposal

Process Proceeds

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6MS


PlanningAgree core transaction team - adviser, external and internal shareholders - key to managing impact on management and employees

Establish the objectives of the sale process

Consider the range of options - merger, spin off, sale to strategic partner, sale to financial partner, recapitalisation, acquisition, IPO, status quo

Evaluate the approach to the sale process; targeted rifle shot, limited auction, broad auction

Agree the objectives of all shareholders and ensure that there is a consensus; management commitment of time to the process is essential; future of management post sale

Agree on accounting and legal advisers - appoint when appropriate

Planning

CoreTeam Objectives

OptionsOther

advisers

Consensus Approach

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6MS


PreparationEstablish company positioning and selling thesis

Prepare and verify documentation - teaser, information memorandum, financial projections, sale process letter, list of data room contents

Prepare management presentation for potential buyers - an opportunity for management to showcase themselves as much as the company

Prepare data room for the due diligence process; legal, accounting, environmental, pension, contracts and loan agreements (change of control), regulatory issues

Consider PR and internal communication issues

Agree timetable for the process - evaluate impact of public holidays and management vacation plans

Preparation

Positioning Documentation

ManagementPresentationTimetable

Communication Data Room

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PartnersEstablish the market positioning of the company

Identify and classify its USPs and strategic positioning

Match the company to the broad market and compatible segments of the market

Identify adjacent categories where the company can offer product, service, geographic or sector extension to a potential partner

Screen databases to create long list of potential partners

Narrow Long List to Tier A and Tier B short list of potential partners - on a global basis

Partners

PositioningCompany

USPs

SegmentMatching

TieredShort list

LongList

SegmentExtension

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Proceeds Evaluate and establish the likely valuation of the company - understand the history, current trading and forecasts along with risk factors

Agree in advance the acceptable outcomes of the proceeds - all shareholders to commit to this

Discuss and agree the nature of acceptable proceeds - cash, shares, loan notes etc. Different shareholders may have different priorities

Consider comparable transactions and valuations

Measure against historic investment and valuation

Evaluate the ability and inclination to pay against the potential acquisition partners - consider historic transactions, funding, access to capital markets, current balance sheet strength

Proceeds

ValuationAcceptableOutcomes

NAture ofProceeds

Ability to PAy

ValuationHistory

ComparableTransactions

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Process Contact buyers - identify and contact key executives in buyers, distribute teaser, sign NDA, issue Information Memoranda, answer questions for further information

Request indications of interest and value - issue a standard set of terms asking potential partners to scope their proposals within this framework

Establish short list of potential partners - negotiate terms with short list - then move negotiations with limited number (1,2 or 3) into due diligence phase, key conditions, evidence of finance (ability to pay)

Prepare and issue first draft of sale and purchase agreement - vendors lawyers to prepare - provide access to data room (possibly on a limited basis - data room 1) to potential buyers, management presentations and site visits if appropriate

Exclusivity and time table to completion; complete due diligence (data room 2) and finalise negotiations with purchaser.

Complete sale and manage communication with external and internal stakeholders - shareholders, management and employees

Process

ContactIndicativeResponse

ShortListClose

Stage 2DD

Stage 1DD

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Proposal

Adviser’s Engagement Terms should cover:

Monthly Retainer

Min Success fee

Success Ratchet

Reasonable costs and expenses

Regular progress reports

Fee structure aimed at aligning interests of Adviser with shareholders

Proposal

RetainerSuccess

Fee

RatchetAlignmentof Interest

ProgressReports

Costs & Expenses

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Proposal

RetainerSuccess

Fee

RatchetAlignment

of Interest

ProgressReports

Costs & Expenses

UniqueProposition

TechnologyFocus Proactive

TransactionManagement

Understanding

Internationalexperience

MarketExpertise

Planning

CoreTeam Objectives

OptionsOther

advisers

Consensus Approach

Preparation

Positioning Documentation

ManagementPresentationTimetable

Communication Data Room

Partners

PositioningCompany

USPs

SegmentMatching

TieredShort list

LongList

SegmentExtension

Proceeds

Valuation AcceptableOutcomes

NAture ofProceeds

Ability to PAy

ValuationHistory

ComparableTransactions

Process

ContactIndicativeResponse

ShortListClose

Stage 2DD

Stage 1DD

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About jbdcolleyJohn Colley has spent over twenty years in investment banking, for the last twelve he has focused on, researched and transacted in the technology sector

His approach is proactive and hands-on, offering senior project leadership combined with first class execution

He has established his own methodologies and processes for making transaction management efficient and transparent

He has developed extensive market knowledge, databases and contacts which are organised in a complex but accessible format

John has extensive experience of working with management teams both in the UK and with a wide range of international businesses

He understands the priorities and objectives of both management and financial investors as well as the importance of confidentiality

UniqueProposition


TransactionManagementUnderstanding


MarketExpertise

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6MS


About jbdcolley

John ColleyPartnerIAF Capital Limitedwww.iafcapital.comBlog: http://jbdcolley.comTwitter: @jbdcolley

UniqueProposition


TransactionManagementUnderstanding


MarketExpertise

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http://www.iafcapital.com

http://www.iafcapital.com



Six Minute Strategist - Mini Guide to Selling a Company mini guide

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