Most divestitures proceed through the following steps:
Working with the owner(s) or management team and key advisors, we identify the goals desired in a sale. During this stage, we confer with other advisors (e.g., attorneys and CPAs) to be sure that legal and personal financial considerations are taken into account.
We prepare a valuation -- a detailed analysis of the value that should be achieved in a sale. We review this with the seller and affirm the decision to go forward.
Using our network of industry contacts, we develop a targeted list of potential acquirers and review it with the seller. We contact prospective buyers by telephone and screen them for interest. Even if preliminary discussions are already underway with one prospective buyer, we have usually found it to be in the seller's best interest to solicit additional buyers.
We require prospective buyers to sign confidentiality agreements before receiving proprietary information. When necessary, we will negotiate the terms of these agreements with buyer counsel.
While the buyer contact process is underway, we prepare a detailed information package referred to as an offering memorandum. It includes financial information (historical and projected) along with a description of the company's markets, clients, competition, staff, facilities, and other resources. The offering memorandum is designed to contain enough information for a prospective buyer to make a bid decision.
We follow up with the offering memorandum recipients to assess their interest, provide additional information as necessary, and arrange for site visits or "chemistry meetings" between the seller and prospective buyer executives.
We conduct initial negotiations with prospective buyers, with the objective of obtaining satisfactory offers. We make recommendations on the form and terms of the sale based on analysis and evaluation of the offers received, as well as on tax issues that come to our attention. When both parties are in agreement on the main points of the business deal, a letter of intent (usually non-binding) is prepared and signed.
Once the letter of intent is signed, attorneys typically begin drafting the final sale contract. At the same time, accountants or buyer financial staff conduct a detailed "due diligence" investigation of the seller's financial condition. We advise the seller and his or her professionals during this process.
We make recommendations on selling executives' salary arrangements.
We assist with any negotiations or financial issues that arise prior to closing.
While this is the most typical pattern, every transaction is different. Depending upon the circumstances and the needs of sellers and buyers, some of these steps may be omitted or occur simultaneously.
Throughout the process, our goal is to assure clear communication and identification of all key issues, so that no problems surface at the last minute to delay or kill the deal.