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This is The Six Minute Strategist Mini Guide to Selling a Company. Visit my website and blog to learn more about Corporate Strategy, Social Media and Business Development - http://jbdcolley.com Blog Published December 2010 can found on my website jbdcolley - The Six Minute Strategist Published under creative commons licence - if you use it please attribute and link back to my site. Thank
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John Colley - The Six Minute Strategist http://jbdcolley.com
The Six Minute Strategist
The Six Minute
Strategist
1
John Colley - The Six Minute Strategist http://jbdcolley.com
The Six Minute Strategist
Selling A CompanyA Mini Guide
6MS
2
6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
CompanySale
Planning Preparation
PartnersProposal
Process Proceeds
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
PlanningAgree core transaction team - adviser, external and internal shareholders - key to managing impact on management and employees
Establish the objectives of the sale process
Consider the range of options - merger, spin off, sale to strategic partner, sale to financial partner, recapitalisation, acquisition, IPO, status quo
Evaluate the approach to the sale process; targeted rifle shot, limited auction, broad auction
Agree the objectives of all shareholders and ensure that there is a consensus; management commitment of time to the process is essential; future of management post sale
Agree on accounting and legal advisers - appoint when appropriate
Planning
CoreTeam Objectives
OptionsOther
advisers
Consensus Approach
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
PreparationEstablish company positioning and selling thesis
Prepare and verify documentation - teaser, information memorandum, financial projections, sale process letter, list of data room contents
Prepare management presentation for potential buyers - an opportunity for management to showcase themselves as much as the company
Prepare data room for the due diligence process; legal, accounting, environmental, pension, contracts and loan agreements (change of control), regulatory issues
Consider PR and internal communication issues
Agree timetable for the process - evaluate impact of public holidays and management vacation plans
Preparation
Positioning Documentation
ManagementPresentationTimetable
Communication Data Room
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
PartnersEstablish the market positioning of the company
Identify and classify its USPs and strategic positioning
Match the company to the broad market and compatible segments of the market
Identify adjacent categories where the company can offer product, service, geographic or sector extension to a potential partner
Screen databases to create long list of potential partners
Narrow Long List to Tier A and Tier B short list of potential partners - on a global basis
Partners
PositioningCompany
USPs
SegmentMatching
TieredShort list
LongList
SegmentExtension
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
Proceeds Evaluate and establish the likely valuation of the company - understand the history, current trading and forecasts along with risk factors
Agree in advance the acceptable outcomes of the proceeds - all shareholders to commit to this
Discuss and agree the nature of acceptable proceeds - cash, shares, loan notes etc. Different shareholders may have different priorities
Consider comparable transactions and valuations
Measure against historic investment and valuation
Evaluate the ability and inclination to pay against the potential acquisition partners - consider historic transactions, funding, access to capital markets, current balance sheet strength
Proceeds
ValuationAcceptableOutcomes
NAture ofProceeds
Ability to PAy
ValuationHistory
ComparableTransactions
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
Process Contact buyers - identify and contact key executives in buyers, distribute teaser, sign NDA, issue Information Memoranda, answer questions for further information
Request indications of interest and value - issue a standard set of terms asking potential partners to scope their proposals within this framework
Establish short list of potential partners - negotiate terms with short list - then move negotiations with limited number (1,2 or 3) into due diligence phase, key conditions, evidence of finance (ability to pay)
Prepare and issue first draft of sale and purchase agreement - vendors lawyers to prepare - provide access to data room (possibly on a limited basis - data room 1) to potential buyers, management presentations and site visits if appropriate
Exclusivity and time table to completion; complete due diligence (data room 2) and finalise negotiations with purchaser.
Complete sale and manage communication with external and internal stakeholders - shareholders, management and employees
Process
ContactIndicativeResponse
ShortListClose
Stage 2DD
Stage 1DD
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
Proposal
Adviser’s Engagement Terms should cover:
Monthly Retainer
Min Success fee
Success Ratchet
Reasonable costs and expenses
Regular progress reports
Fee structure aimed at aligning interests of Adviser with shareholders
Proposal
RetainerSuccess
Fee
RatchetAlignmentof Interest
ProgressReports
Costs & Expenses
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
Proposal
RetainerSuccess
Fee
RatchetAlignment
of Interest
ProgressReports
Costs & Expenses
UniqueProposition
TechnologyFocus Proactive
TransactionManagement
Understanding
Internationalexperience
MarketExpertise
Planning
CoreTeam Objectives
OptionsOther
advisers
Consensus Approach
Preparation
Positioning Documentation
ManagementPresentationTimetable
Communication Data Room
Partners
PositioningCompany
USPs
SegmentMatching
TieredShort list
LongList
SegmentExtension
Proceeds
Valuation AcceptableOutcomes
NAture ofProceeds
Ability to PAy
ValuationHistory
ComparableTransactions
Process
ContactIndicativeResponse
ShortListClose
Stage 2DD
Stage 1DD
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
About jbdcolleyJohn Colley has spent over twenty years in investment banking, for the last twelve he has focused on, researched and transacted in the technology sector
His approach is proactive and hands-on, offering senior project leadership combined with first class execution
He has established his own methodologies and processes for making transaction management efficient and transparent
He has developed extensive market knowledge, databases and contacts which are organised in a complex but accessible format
John has extensive experience of working with management teams both in the UK and with a wide range of international businesses
He understands the priorities and objectives of both management and financial investors as well as the importance of confidentiality
UniqueProposition
TechnologyFocus Proactive
TransactionManagementUnderstanding
Internationalexperience
MarketExpertise
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6MS
John Colley - The Six Minute Strategist http://jbdcolley.com
About jbdcolley
John ColleyPartnerIAF Capital Limitedwww.iafcapital.comBlog: http://jbdcolley.comTwitter: @jbdcolley
UniqueProposition
TechnologyFocus Proactive
TransactionManagementUnderstanding
Internationalexperience
MarketExpertise
12