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Market the deal

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Selling

Selling a business – Part III:

We can mar­ket the deal after pre­par­ing the busi­ness for sale. We shall bring the oppor­tun­ity to the mar­ket main­tain­ing con­trol of the pro­cess and the dis­tri­bu­tion of inform­a­tion, while motiv­at­ing bid­ders along par­al­lel paths on a level play­ing field in case of a broad or restric­ted auc­tion, or even lim­it­ing it to an indi­vidu­al pro­cess, accord­ing to your require­ments.

 

Even if flex­ib­il­ity and read­i­ness to amend pro­cess and papers is neces­sary, a dis­cip­lined approach requires best pos­sible pre­par­a­tion and exclus­ive rep­res­ent­a­tion. Any com­prom­ise on such ini­tial decisions is a trade-off pos­sibly affect­ing the out­come for the seller.

The normal procedure to market the deal is to:
  • Con­tact buy­ers with a reduced but strong no-name sum­mary focused on stra­tegic and quant­it­at­ive key ele­ments. Spe­cial­ized data banks are gain­ing import­ance to expand reach and com­pet­i­tion bey­ond the spe­cif­ic researched buy­ers list.
  • Agree con­fid­en­ti­al­ity (also referred as NDA, CU, NCND).
  • Deliv­er the detailed Offer­ing Memor­andum (also IM, CIM)
  • Fol­low up, com­plete inform­a­tion, arrange inter­ac­tion with man­age­ment. The bet­ter the Offer­ing Memor­andum, the less­er the man­age­ment dis­trac­tions, delays and dif­fer­ence in pro­spect buy­ers’ treat­ment. At this point there might still be many parties inter­ested in receiv­ing inform­a­tion.
  • Receive non-bind­ing indic­a­tions of interest. These uni­lat­er­al indic­a­tions which are some­times referred as let­ters of intent (LOI) too, shall con­tain inform­a­tion about the real interest, fit and abil­ity to execute the trans­ac­tion.

In the mean­time, inputs from buy­ers’ inquir­ies and from indic­a­tions of interest help com­plete the Data Room extent and pre­par­ing man­age­ment present­a­tions.

At this point, strongly inter­ested parties on the short list will be gran­ted access to the Data Room, pro­ceed to face-to-face meet­ings, man­age­ment present­a­tions, or some­times even site vis­its and be invited to sub­mit final bids pos­sibly based on a draft trans­ac­tion struc­ture or even a draft sale agree­ment, or a share pur­chase agree­ment (SPA).

Bring­ing to the mar­ket the deal, have assumed a bid­ding / auc­tion pro­cess while also easi­er and more con­fid­en­tial but less max­im­ising bilat­er­al pro­cesses with single coun­ter­parties are com­mon too.

More details about how to sell a com­pany are approached in the next post. If you have ques­tions, con­sult us, we’ll be glad to help.