The process of finding and acquiring the right business that fits your specific requirements usually consists of more or less 8 steps. These phases are listed below:
- Phase 1 – Letter of Engagement and Understanding your requirements
- Phase 2 – The long list
- Phase 3 – The Short List
- Phase 4 – Valuation
- Phase 5 – Negotiation
- Phase 6 – Letter of Intent
- Phase 7 – Due Diligence
- Phase 8 – Acquisition
Steps to Buying a Company
Phase 1 – Letter of Engagement and Understanding Your Requirements
In this phase we begin by getting to know your vision. Once this has been established, we begin by assessing your requirements to achieve this vision. Then we will begin on drawing up detailed profiles of the companies you wish to acquire as well as the synergies and objectives you are wanting to achieve.
For more on synergies read
Synergies and Deal Making
Once we are certain we can assist you in achieving your company’s goals. You will be presented with a letter of engagement. The letter of engagement will give you an understanding of how we work. Once this has been signed we can move forward with helping you achieve your goals.
Phase 2 – The Long List
In this phase we start by using our data base as well as other resources to begin searching for the existing companies that fit your search profile. The result from this search is a long list of possible targets.
Phase 3 – Shorten the List
Once you have approved of our long list of possible candidates, we begin contacting these companies. When contacting them, we will give them a clear picture of the possible advantages they could benefit from a takeover.While maintaining your and your companies anonymity if necessary.
During these discussions, we will gather further information about the company of interest. Depending on what we find, the company will be moved to the short list or removed from consideration altogether. The outcome will be a short list of possible targets for consideration.
Phase 4 – Valuation
Moving down the short list we will do valuations based on agreed methods. During this process we will get a better understanding of the candidates expectations. This will give us a foothold for which to commence the negotiations. Those candidates with unrealistic expectations will no longer be considered thus creating a even shorter list.
Phase 5 – The Negotiation Process
Once we have established the prospective company’s valuation as well as the seller’s expectations. We begin to negotiate. There are many methods of negotiation we use for different types of acquisitions.
For example, should you be wanting to acquire a majority stake in the targeted business. We would focus on showing the seller the value that could be added by the proposal. Such as, increasing the value of the sellers shares in the company.
Phase 6 – The Letter of Intent
Once we have have zeroed in on the best suited target for your vision. A letter of Intent is negotiated with the company to be acquired. Should the target be a smaller candidate we would draw up a 1 page terms sheet. This will give both the seller and the buyer a basic understanding of the future contract framework.
For More about the legal documents involved in the purchase of a business see Legal Documents.
Phase 7 – Due Diligence
Our firm can do all the necessary due diligence required to safely acquire a business. However should you wish to use your own employees, or your own choice of accounting firm. We will be there to assist. The Due diligence process involves the legal operational ,financial as well as other areas of the business. In this phase, our accountants, or yours will make sure that all the figures add up with the financial statements.
To learn more about the due diligence process click here.
Phase 8 – Contract and Acquisition
Once the due diligence has been performed with full in depth look into the company’s financials, operations, legal structure, physical assets and other areas of the business. A contract will be drawn up and signed. C.R.E.F ‘s legal professionals can provide this service if desired.
For further information about legal documents click here.
Also, feel free to contact us to inquire about our services.