Originally a comment, but it got some traction. So I created a new post and added to it.
Project Name
This shit is important Your MD just came back from Colorado and he was mystified by the Aspen trees. Project Aspen. Lets fucking ride.
Organizational Meeting
Kickoff call mother fucker. Biggest thing is laying out Transaction Workstreams to align everybody on timing/expectations. MD will promise everything by Mid *whatever next month is. You never deliver.
Transaction Workstreams
- NDA
- Buyers List
- Teaser
- Model
- CIP
Send Teaser and NDA to Buyers List
Teaser includes general information about the company. Nothing that makes the company identifiable. Basic financial information, geography. Then time to send and track NDA email responses to a "broad universe of strategics and financial sponsors", follow up on NDAs, and send daily progression reports to the deal team. Fucking awful, your MD will decide to review in detail every Friday night, expect comments turned on Saturday. If buyer is interested, they send back executed NDA and wait for next phase.
CIP Model IOI Process Letter
After executing NDA, interested buyers receive CIP, Model, IOI process letter. Buyers are excited to "dig-in". As an analyst, youre excited the buyer you forgot to send the NDA to didn't follow up.
Pre IOI Diligence Meetings
We speak with interested buyers. Buyers ask for data you don't have. Buyers will ask for "valuation guidance". You basically tell them to kick rocks, and submit a bid you can support in diligence. Pro-tip here - schedule these little fuckers for 15 minutes. All the information we have is in the CIP. 15 minutes is the perfect amount of time. "It just helps to get some dialogue" Fuck the fuck off. 15 minutes. Actually though: always get an agenda. Otherwise your left with 3 questions you didn't have an answer to and now have to send a written response.
Indication of Interest
You receive a number of bids. Most attractive bid is almost always the highest valuation. Although some buyers have not done much diligence work which makes the bid less attractive. You want a buyer who is serious and can support their bid through diligence. A tighter timeline (e.g. 45 days to sign) can make the bid attractive too.
Buyer will have legal advisors draft an LOI. This will outline Sources and Uses, working capital at close, key employee plans, diligence advisors, assumptions that need to be supported during diligence (e.g. EBITDA adjustments). Biggest thing with LOI is exclusivity. When you move forward with a party at the LOI stage, the buyer gets exclusivity. Reason being the buyer will spend a considerable amount of money during diligence, so the buyer needs to be sure they will be able to make an informed buy or no buy decision without someone else swooping in and yoinking the your shitty company.
Diligence
You've got 8 diligence streams with 200+ requests heading straight for your bung hole. And those suckers have some velocity. Depending on the LOI, there can be some significant milestones that need to be met to keep exclusivity, so all data needs to get exchanged immediately. Ever heard of a "critical" request? Mother fucker they are all critical. Get used to the word "piecemeal". Just send it piecemeal. Also "velocity of data" But actually this part of the deal can be interesting. I enjoy talking about the why behind some of the requests, comparing data requests to other deals, and checking out the employee census file to compare dong size (salary).
