Why?

Because … the process is overwhelming. With so many moving parts, stakeholders, legal challenges, timing issues, and — of course — that nagging feeling that you’re leaving “money on the table,” navigating a merger and acquisition can leave you feeling paralyzed.

To get you moving in the right direction, I’ve broken down the M&A process into its simplest form … three rounds with all the details.

Round 1: Identifying Prospective Buyers

• Contact prospective buyers
• Negotiate and execute confidentiality agreement with interested parties
• Distribute CIM and initial bid procedures letters
• Initial bid procedures letter:
• Defines time frame for document submission and information/material required
• Prepare management presentation
• Set up data room
• Prepare stapled financing package
• Receive initial bids and select buyers to proceed to 2nd round
• Valuation perspectives – strategic vs. financial

Round 2: Targeting and Executing

• Conduct management presentations
• Pitch client to prospective buyers
• Overview of target company
• Facilitate site visits
• Essential component of buyer due diligence
• Provide data room access
• Data room contains all info about all aspects of the target (business, accounting, tax, legal, financial, insurance, etc)
• Distribute final bid procedures letter and draft definitive agreements
• Distribute final letter to remaining prospective buyers
• Final bid:
• Outlines the exact date and guidelines for submitting a final, legally binding bid package
• Usually more stringent
• Definitive agreement: legally binding contract between buyer and seller detailing terms and conditions of the sale transaction
• Receive final bids
• Prospective buyers submit their final bid package to the sell-side advisor by date

Round 3: Final Closing

• Evaluate Final Bids
• Must weigh the binding nature of agreement (stable & lower price > unstable higher price)
• Negotiate with preferred buyer(s)
• Seller negotiates with two parties or more to settle issues
• Select winning bidder
• Negotiate a final definitive agreement with the winning bidder
• Presented to target’s board of directors for approval
• Render fairness opinion (if required)
• Is a letter opining on the “fairness” (from a financial POV) of the consideration offered in a transaction
• Supported by detailed analysis and documentation providing an overview of the sale process run, as well as an objective valuation of the target
• Receive board approval and execute definitive agreement
• Once the seller’s board of directors votes to approve the deal, the definite agreement is executed by the buyer and seller

[This is only the outline for the article. Please check again for the full content. We intend to publish 1 article every month.]

The post Mergers & Acquisitions Made Simple: 3 Rounds appeared first on Stern Ventures.

This means, if you’re raising capital to expand your business, your number one job is to make sure the demand for what you supply is high … incredibly high. And one of the most powerful tools to raise demand in the eyes of your prospective investors is scarcity.

As persuasion expert Robert Cialdini explains …

According to the scarcity principle, people assign more value to opportunities [and objects] when they are less available.

The scarcity principle holds true … because things that are difficult to attain are typically more valuable, the availability of an item or experience can serve as a shortcut cue to its quality.

In other words, the less available and more in demand you are … the more prospective investors will want your business.

On the opposite end of the scarcity spectrum is desperation.

And that’s most business owners fundamental problem.

So, how do you get real-world decision makers fighting over your business, instead of being forced to fight with them for theirs?

Four keys …

Identify your ideal investor.
Target not one, but an entire network of decision makers.
Pitch directly to each prospective partner.
Herd your investors … be a cowboy.

[Is there a “secret” fourth step that you could reveal? Something that drive competition and puts the client in the driver seat? Something related to urgency and scarcity?] YES! BE A COWBOY => Herd the investors. If some investors are moving faster than the rest, throttle them while hurrying the rest of the pack. When multiple investors are trying to squeeze through a gate designed only for one of them, the competition is ON.

[This is only the outline for the article. Please check again for the full content. We intend to publish 1 article every month.]

The post Competitive Bidding: How to Get Decision Makers Fighting Over Your Business appeared first on Stern Ventures.