Ilse De Loof

Business Acquisition Process

Implementation & transition Closing Negotiation of

the transaction Due

Diligence Engagement Target

Identification

Phase 1: Target identification

•  Letter of interest •  CA & NDA

Deal teams

•  Executive Management

•  Board •  Legal

Key activities

•  identify potential acquisition target

•  gather preliminary information

•  go/no-go assessment

Key deliverables

•  Letter of interest

•  CA & NDA

Phase 2: Engagement

•  Letter of interest •  CA & NDA

Deal teams

•  Executive Management

•  legal •  finance •  HR •  mini DD teams

Key activities

•  prepare mini DD

•  review high level financials

•  gather more detailed acquisitions data

•  prepare Letter of Intent

•  select outside consultants

Key deliverables

•  Internal NDA for deal team

•  mini DD report •  Letter of Intent

Phase 3: Due Diligence

•  Letter of interest •  CA & NDA

Deal teams

• Executive Management • legal • finance • HR • Operations/technical • Commercial • risk management • IT • quality & safety • External advisors

Key activities

• Kick-off meeting deal team • prepare DD charter & checklist • set up data rooms • Data collection • Data analysis and risk identification

• prepare preliminary plans • site meetings • evaluations of people & culture • quantify major risks & opportunities

• develop mitigation strategy • draft DD report • Prepare first draft of purchase agreement

• obtain board approval to proceed

Key deliverables

• DD report • board presentations

Phase 4: Negotiation of the transaction

•  Letter of interest •  CA & NDA

Deal teams

•  Executive Management

•  legal •  finance

Key activities

•  Negotiations by deal team

•  Finalize purchase agreement

•  obtain waivers & approvals

Key deliverables

•  purchase agreement

•  waivers & approvals

Phase 5: Closing

•  Letter of interest •  CA & NDA

Deal teams

•  Executive Management •  legal

Key activities

• simultaneous signing & closing vs deferred closing

• Virtual vs in-person closing

Key deliverables

• purchase agreement • board & shareholder consents • secretary’s certificate certifying the accuracy & effectiveness of the relevant authorizing resolutions and charter documents of the target company

• Shareholder approvals • legal opinions • ancillary agreements & documents: provisionary notes, bill of sale, employment agreements, escrow agreements

• considerations (stock or cash) • regulatory approvals • evidence of third party consents & waivers

• evidence of release of any liens

Phase 6: Implementation & Transition

•  Letter of interest •  CA & NDA

Deal teams

•  Executive management

•  Functional leads

Key activities

•  appointment transition & integration team

•  identify and agree post-closing obligations

Key deliverables

•  integration & transition plan and schedule

•  organisation chart

•  communication plan

Due Diligence

Plan Collect Analyze Report

Plan Scope the DD:

•  determine transaction, scope and timing •  tailor the DD checklist and risk focus to the target,

its industry and type of transaction (asset vs stock) •  know what information is already available •  determine materiality thresholds

Determine different fields of DD

Vendor DD: beware of high level DD

Target

Technical

Legal

Financial & Tax

Integrity & Background

Check

Environ-mental

Coordinate the DD process: •  appoint a DD coordinator •  organize the DD team based on geography, lines of

business, organisational structure •  balance external vs internal team •  secure highest degree of confidentiality in order to

not influence stock price of listed companies •  clear scope descriptions of each team member •  organise regular update calls – status reports

Collect Dataroom:

•  invest in a virtual dataroom •  monitor confidentiality and strict access control

•  viewing •  copying •  printing

•  time limits on viewing and logging •  strategic vs financial buyers •  black box for final bidder

•  customer contracts: pricing •  senior executive contracts

Analyze Early identification of problems & obstacles

•  Change of control provisions •  Acceleration events •  Protective provisions •  Waivers, notices, consents •  Antitrust •  Volume commitments •  Refinancing •  Bonusses triggered •  Litigations

- Evaluate impact on pricing - Secure waivers and approvals

Purpose DD Report:

1)  advise whether or not to proceed with acquisition 2)  summary of nature of target, potential risk and

opportunities 3)  present data collected in order to negotiate a

favorable purchase price 4)  basis for the draft of the representations and

warranties section of the purchase agreement

Report