Acquisition
It’s important to use capable, experienced, and objective assistance when initiating or responding to acquisition opportunities. For example, upon being approached by an industry friend interested in selling his or her company, it may be difficult for you to tell that individual you have an interest, but the business is worth far less than they think it is.
Rice & Associates works with either reactive or proactive acquisition engagements. Reactive acquisition process is similar to proactive, except for certain criteria, targeting, and evaluating activities. In a proactive acquisition process, Rice & Associates:
- Helps clarify the acquisition criteria
- Targets, contacts, discerns interest, & clarifies expectations of sellers - and in the process begins to gain sellers confidence, trust, & respect
- Handles confidentiality matters
- Requests and handles correspondence
- Evaluates the acquisition, and reviews for certain concerns & opportunities - like synergistic fit or cost reduction possibilities
- Performs a fair market business valuation that’s able to be explained & defended
- Analyzes your return on investment
- Prices the offer, or reviews & credibly responds to seller’s pricing
- Negotiates the deal
- Bridges significant differences in deal gaps through listening, finding solutions, and, as needed, via use of risk/reward contingency pricing
- Summarizes key components of the deal - see Term Sheet under Business Sale for typical key components
- Interacts with your due diligence tea
- Works with your attorney to bring the acquisition to a successful close
Not as glamorous, but many times the best deal is the one not made. Rice & Associates has helped screen out or pass on many more acquisition candidates or deals than those consummated.
Business Sale
Rice & Associates, given the proven track record of performance, experience, capability, and other key reasons listed under “Why Rice & Associates?”, represents a logical choice to assist you in executing a business sale exit strategy. As part of its merger & acquisition advisory role, Rice & Associates up front works with you to determine viable options & timing.
Rice & Associates works with either reactive/limited or proactive sale engagements. Reactive sales process is similar to proactive, except for certain information, targeting, and CSM activities. Proactive sales process includes:
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Rice & Associates: |
Prep for Sale and Information
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- Addresses timing, management, performance, audit, and financial considerations
- Gathers and assimilates information
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Valuation/Pricing
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- Performs a fair market business valuation, principally utilizing free cash flows (EBITDA) income approach or discounted cash flows (DCF) where future cash flows are predictable and uneven
- Does credible recasting, and looks at deal from both seller and buyer perspective - to get done, deal has to work for both parties
- Builds a case for “expected” earnings/EBITDA
- Understands value drivers
- Generates competitive buyers and options
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Targeting
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- Targets (rifle approach), contacts, discerns interest, & positions the expectations of qualified strategic or Rice & Associates network of financial buyers
- Utilizes CDA for up front confidentiality protection
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Confidential Sale Memorandum (CSM)
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- Prepares professional company profile or less formal, where called for, marketing package to limited, interested targets - CSM typically includes company overview; transaction reasons & objectives; major assets for sale, including intangibles; marketplace discussion; people; financials; & buyer’s opportunity
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Negotiations & Term Sheet
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- Negotiates & sells the deal
- Able to articulate & defend valuation, and bridges real differences in expectations
- Drives the Term Sheet - typically includes pricing, transaction structure, terms, people/employment, allocation, lease, non-compete, timing, “stake-in-the-ground” matters, third party handling, earn-outs, indemnification provisions & other major reps, and other key components to the transaction
- Monitors buyer’s due diligence
- Gets parties through the deal’s rough spots
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Purchase Agreement
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- Coordinates and works with your attorney to see the deal sticks to intent, and gets documented through to a successful conclusion
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