slide1
Download
Skip this Video
Download Presentation
Anatomy Of An M&A Deal

Loading in 2 Seconds...

play fullscreen
1 / 57

Anatomy Of An M&A Deal - PowerPoint PPT Presentation


  • 115 Views
  • Uploaded on

Anatomy Of An M&A Deal. Build Target List/Make Contact Send/Receive “Teaser” Execute NDA Send/Receive “Book” Execute LOI (“Indicative Bid”) Negotiate & Draft PSA Negotiate & Draft Escrow Pre-Closing Adjustments & Close Post-Closing Integration. Anatomy Of An EIN Deal.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Anatomy Of An M&A Deal' - melyssa-bauer


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide2

Anatomy Of An M&A Deal

Build Target List/Make Contact

Send/Receive “Teaser”

Execute NDA

Send/Receive “Book”

Execute LOI (“Indicative Bid”)

Negotiate & Draft PSA

Negotiate & Draft Escrow

Pre-Closing Adjustments & Close

Post-Closing Integration

slide3

Anatomy Of An EIN Deal

Build Deal Flow

Pitch The 3 x 3 x 3

Negotiate Your Deal (NDA?)

Sign Equity Agreement

Implement The Fix

Monthly Fee

Exit

slide4

Notes From The Field

Faster Is Better

Negotiation Is Key

LOI Based Multiple

Clear Financial Warts

Recast Financials

Build Bench Strength

Systems/Documentation

slide5

THINGS TO KNOW ABOUT EQUITY DEALSOne in ten preliminary discussions leads to a signed LOI60% of signed LOIs actually closeDue diligence typically costs $25k whether the deal closes or not2/3 of closed transactions produce expected value

where to get deals
Where To Get Deals
  • Networking Groups
  • Toastmasters
  • Chamber Commerce
  • Live Conferences
  • Angel Funds (AIN)
  • VC Firms
  • Business Plan Comps
  • SBDCs
  • Ad Agencies
  • Trade Shows
  • Attorneys
  • CPAs
  • Business Appraisers
  • Bankers
  • Real estate Brokers
  • M & A Firms
  • MeetUp
  • LinkedIn
where to get deals1
Where To Get Deals
  • Pink Sheet Companies
  • PR Firms
  • Press Releases
  • WSJ/IBD/FT/Barrons
  • Craigslist
  • Gust
  • Caplink
  • Industry/Trade Pubs
  • Inc. 500 List
  • Local Paper (Biz Opps)
  • Business Brokers
  • Online Forums
  • Church
  • Magazines
  • YPO
  • BK Filings
  • Vistage
  • CEO Roundtable
loi terms1
LOI Terms
  • Price
  • Form of Purchase
  • Structure Of Purchase
  • Mgmt Contracts
  • Closing Costs
  • Due Diligence
  • Reps/Warranties
  • Broker Fees
  • Timeline for Closing
  • Insurance
  • Standstill
  • Break-Up Fee
  • Earnings Disposition
  • Pre-Closing Access
  • “Special” Disclosures
  • Confidentiality
  • Seller’s Role Post-Close
  • Non-Compete
slide20
Negotiating The LOIBuyers pay more in asset sale than stock saleExclude items from sale to reduce PP (e.g. AR, FFE, RE)Payment Terms
items needed to draft loi
Items Needed To Draft LOI
  • Financial Statements
  • Shareholder List
  • Key Manager List
  • Incentive Comp Plans
  • ESOPs
  • List Of All Contracts
  • List of Major Customers
  • Key Person Ins. Policies
  • List of A/R
  • Add-backs For Non-Customary Expenses
  • RE & FFE Appraisals
  • Inventory WIP Breakdown
  • Capital Exp. Over Past 5 Years
  • Anticipated Cap Exps.
  • Copies of Loan Docs
  • Holder Buy/Sells
policies procedures
Policies & Procedures
  • Roles & Responsibilities
  • Recurring Mgmt. Meetings
  • Bus Dev Strategies
  • Marketing Methods
  • Sales reporting, quotas & commissions
  • Bidding, estimating, contract review & approval
  • Project management process and responsibilities
  • Product development, QC and delivery
  • Customer Services and warranties
  • Billing, AR, discounts, credits, returns, refunds and special orders
policies procedures1
Policies & Procedures
  • Purchasing and PO approval process
  • Shipping & Receiving
  • Cash management
  • Business hours/holidays
  • Equipment operations, maintenance & repair
  • Computer operations & security
  • Email, web usage, website postings
  • Process for collecting changes to P&P manual, usually best done on a wiki
slide29
Recasting Financial StatementsYour Salary & BenefitsInvestment IncomeGains/Losses From Sales Of Business Assets
increasing valuation stabilize customer relationships long term ks
Increasing ValuationStabilize Customer RelationshipsLong-Term Ks
slide38
Increasing ValuationIncrease Contracts BacklogUn-invoiced Balance KsDivided By Average Monthly Revenue. Ideally 6 Months or More Backlog
remove financial warts
Remove Financial Warts
  • Unreconciled Balances
  • Uncollectible ARs
  • Excessive Write-Offs
  • Overdue APs
  • Unrecognized APs
  • Non-transferable Licenses
  • Clouded Title To Key Productive Assets
  • Owner Asset Use
  • Personal Property Owned By Company
  • Loans To Owners
  • Unprotected IP
  • Unrecognized Liabilities
  • Expiring/NT Leases
  • Pending Lawsuits
  • Unfunded Retirement
  • Unfunded Warranties
remove financial warts1
Remove Financial Warts
  • Lack of Budget
  • Lack of Spending Controls
  • Dependence On Few Clients For Revenue
  • Contracts Losing $
  • Understated Cost to Complete Fixed $ Jobs
  • No Bottom-Up Projections
  • No Month-By-Month Accuracy Audits
  • Low Margins & Earnings
  • Hockey Stick Pro Formas
slide47

Valuation MethodsPratt’s Stats (https://www.bvresources.com) BIZ Miner (https://www.bvresources.com) BIZ Comps (https://www.bvresources.com)

slide49

Valuation Methods – Comps(Precedent Transaction Analysis)Select the Universe of CompsLocate necessary financial infoSpread key statistics, ratios and trading multiplesBenchmark comp companiesDetermine valuation

slide50

Valuation Methods – DiscountedFuture Cash FlowsStudy target and determine performance driversProject free cash flowCalculate weighted average cost of capitalDetermine terminal valueCalculate present value and determine valuation

due diligence1
Due Diligence
  • Market
  • Product
  • Business Model
  • Management
  • Background Investigations
  • Legal
  • Financial
  • HR
operational due diligence
Operational Due Diligence
  • Business Model
  • Org Chart
  • Ops Manual
  • Production Process
  • Delivery & Shipping Process
  • Customer Base
  • Billing Practices & Contracts
  • Sales & Marketing
  • Staff
  • Production & Service Delivery
  • Litigation/Disputes
financial due diligence
Financial Due Diligence
  • Trending Reductions in Current Assets
  • Trending AR Increases
  • Trending BDA Increases
  • Inventory Build-ups
  • Asset Replacements
  • Increasing CL
  • Increasing LTL
  • Decreasing Revenue
  • Increasing Discounts
  • Increasing Returns
  • Increasing COGS
  • Decreasing Line Item Sales
  • Increasing Line Item Expenses
ad