Strategic Analysis

An environmental scan is performed and it is decided to buy or sell an asset, division, or company in order to achieve a strategic objective such as growth, entering or exiting a geographic area or product line, or capital management.

Opportunity Evaluation

Once a strategic direction is determined, potential opportunities are evaluated at a high level. As a buyer, you might review a deal's pitch book or teaser to evaluate your level of interest. As a seller, you decide if you want to run a broad or targeted process and send your marketing materials to potential buyers.

Deal Formation

If the initial opportunity sparks your interest, it is further explored at this stage. Buyers work on a preliminary valuation for the deal in order to support their bid / offer. Sellers work to keep the appearance of a competitive bid with multiple interested parties in order to try to inspire higher bid prices. This is where a Phase 1 Due Diligence mandate fits.

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The seller will evaluate their bid(s) and select whether to enter into a letter of intent (LOI) with one buyer.

Deal Execution

Once a buyer knows they have exclusive rights to a transaction, and signs a confidentiality agreement, they can now evaluate the deal in more detail. This is where a Phase II Due Diligence mandate takes place. While the initial bid was a preliminary valuation, due diligence helps refine the final purchase price by analyzing all of its various components. Due diligence also allows the buyer to gain a better understanding of the target and evaluate whether it meets the buyer's strategic objectives.

Deal Integration

Once a deal has been closed, the new owner looks for operating improvements and efficiencies, as well as integrates the purchase into their existing business, if applicable. Deals are often done with the idea that there is low-hanging fruit that can be optimized post-close.