Buy-side m&a process

Rank: Gorilla | 639

Hey guys, I Need some help. I understand that this is the typical sell-side process:

Winning the mandate - This phase includes creating the pitch, the actual pitch, the signing of the engagement letter, and any preliminary calls with management to learn more about the company.

Marketing - This phase includes receiving initial documents from management, setting up a data room, creating the marketing materials (teaser and CIM), and sending out the teaser together with the NDA. If the potential buyer signs the NDA, you send them the Information Memorandum. You will also set up your valuation model at this point.

Indication of Interest - The potential buyers may come back to you with follow-up questions and request a call, possibly with management. The amount of information apart from the CIM given to potential buyers is usually very limited at this stage. Potential buyers will then submit their IOIs.

Letter of Interest - This step usually starts with selecting a select few potential buyers who submitted an IOI to attend management presentations. There may be site visits involved here too. At this point, you will have set up a formal data room that is being populated with a base level of information. Almost all potential buyers will have specific follow-up requests and might even request additional calls with management. Potential buyers now submit an LOI.

Final due diligence and closing - You now select one potential buyer with whom to move into exclusivity. This potential buyer will send you a detailed due diligence list to be answered. Third party advisers usually get involved at this point to run their own diligence process (e.g. quality of earnings, environmental assessments, benefits analysis, insurance analysis, etc.). One party will start drafting a purchase agreement, and then your client's counsel and the potential buyer's counsel will trade edits. You then finalize the diligence process and sign the purchase agreement.

But how does the buy-side process look like?

Comments (3)

Best Response
Mar 12, 2018
  • Get an inbound from client
  • Sign NDA if needed
  • If first round, use CIM to pull together preliminary valuation and submit offer
  • If moved to second round or client involve you after they are in second round, get on data room, help with participating in management presentation, organize client around diligence session, track diligence items, come up w pesky questions for counter party, etc.
  • Do a refined valuation based on diligence, clients view, etc.
  • Do PF analysis / merger math Stuff if public buyer
  • Do a board deck (or many) to get sign off
  • Help prepare investor deck and Q&A if public company
  • Do interloper analysis type stuff
  • Help with merger agreement, etc.
  • If equity or debt financing needed, to through those committees and related client / public market motions
  • if not an auction and more of a direct approach, initial steps vary (eg you may do some pre work with client and submit a preliminary offer to engage counter party)
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Mar 13, 2018

Thank you, I appreciate it!

Mar 14, 2018
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