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Although no two acquisition assignments are exactly the same, all successful searches typically include the same basic steps, normally conducted in the same order. Your PSMJ mergers and acquisitions consultant will guide you through each of these steps to ensure that we not only find you the right firm to acquire, but that we also help set the stage for post-acquisition success.
The process we have refined over time includes 7 basic steps – click on each to see what they entail.
Before beginning your search, your PSMJ consultant will help you and your acquisition team reach consensus on the…
- strategic objectives associated with making the acquisition,
- search criteria (ideal seller profile) and deal structure preferences,
- search process and individual roles of acquisition team members, and
- proposed timeline for the potential acquisition.
When this initial step has been completed, you are ready to start the actual search process.
After establishing appropriate search criteria and profiling the “ideal” acquisition candidate, we are ready to begin the actual search process, starting with a list of potential candidates. During this step, PSMJ will . . .
- use proprietary data bases to search for firms that appear to meet your search criteria,
- prepare an initial target list for your review and input, and
- prepare a final list of candidates targeted for initial contact by PSMJ.
During development of the initial target list, we encourage our buyer clients to identify any firms they know to be possible candidates, especially if there is some reason to believe that the firm would respond favorably to our approach. This helps ensure a complete list, plus it gives us valuable pre-contact intelligence.
There are many ways to contact potential acquisition candidates and your PSMJ consultant will develop an approach strategy that best fits your particular situation. However, our experience has shown that the most effective contact strategies will involve…
- sending a confidential letter or e-mail to the CEO,
- as appropriate, follow-up phone contact by your PSMJ consultant,
- possible use of a Non-Disclosure Agreement, and
- continuing efforts to qualify the target firms as a viable candidate.
Once a prospective candidate has expressed interest in an initial face-to-face meeting, PSMJ will make appropriate arrangements and help set the stage for the all-important introductory meeting. As future discussions with the candidate firm ensue, your PSMJ consultant will help keep both parties focused on issues that will be crucial to reaching mutual agreement on a possible acquisition scenario.
After efforts to confirm cultural and strategic fit have produced positive results, and you have decided to enter into negotiations with the prospective acquisition candidate, your PSMJ consultant will serve as your advisor during this most delicate phase of the M&A process. Our role typically includes . . .
- identifying the critical issues that must be addressed during negotiations,
- providing input during efforts to value the business and determine the best pricing strategy,
- helping to develop an appropriate deal structure, including payment terms, performance components, etc., and
- serve as a communication vehicle and “sounding board” during negotiations.
Once you and the potential acquisition candidate have reached an agreement in principle, your PSMJ team will help you develop a Letter of Intent, which characterizes the agreements and understandings made by the parties during negotiations. In essence, it summarizes the terms and conditions under which you would agree to make an acquisition of the seller’s firm. If the Letter of Intent is well-written, it will help eliminate potential misunderstandings that can occur after the preliminary negotiations have concluded.
The purchase agreement (Definitive Agreement), which your attorney typically prepares, is the formal document used to consummate the transaction. It includes all of the legal elements, schedules and exhibits required to transfer ownership, and will vary in length and complexity, depending on the type of transaction. While PSMJ does not offer legal advice, we will offer suggestions, as appropriate, during development of the Definitive Agreement.
Due diligence is a process whereby the buyer confirms that the seller has accurately represented the condition of the assets being purchased (including contract backlog), as well as the firm’s financial and legal circumstances. It’s also a time for “soft” due diligence, an opportunity for you to evaluate the seller’s key staff and confirm their commitment to the proposed business combination. As appropriate, PSMJ will help you conduct a smooth and expeditious due diligence process, which typically includes:
- divulging legal documents and other business records,
- reviewing contracts and confirming the status of uncompleted projects (backlog)
- as appropriate, use of MAAP, our proprietary process that measures cultural compatibility and assesses key staff expectations,
- developing a list of issues that must be resolved before closing can take place, and
- creating both an internal and external communication plan.
The closing of the deal is a relatively straight-forward process led by attorneys for both seller and buyer. It occurs when all of the necessary legal documentation has been executed and funding takes place. Planning for post-acquisition integration, is something that must begin before the purchase agreement is finalized and signed. Every integration plan is different, and your PSMJ team will help you establish one that is right for your particular situation. However, most plans include…
- an internal and external communication plan,
- an integration plan and timeline (systems, staff, operations, facilities, etc.)
- a plan for staff and client retention,
- decisions on what vendors, advisors, equipment, and systems to utilize, and
- a final decision on all naming and branding.
To have a PSMJ consultant contact you about assisting with the potential sale
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