BOWMAN, LTD
M&A Process
An understanding of the process of divesting/selling a business is critical for a smooth and satisfactory transaction. It is helpful to have a written outline for the business owner to review while gathering thoughts and making decisions.
Face to face meetings will be necessary to gain full confidence in my ability to professionally handle the sale of your company. Likewise, I will need to have confidence that you are fully and honestly sharing information about your business. I have owned numerous businesses, and I know all businesses have warts and weaknesses. I must have an in depth understanding of your business operations, its history, and financial condition, as well the knowledge that you (the owner and all partners) are committed in your desire to sell.
I recommend you utilize other professionals whose advice you may rely upon in making this decision. Having these parties present at future meetings is welcome. Further, I highly recommend you speak to your wealth advisor to understand what your personal financial condition will be post-closing.
Once we have reached a verbal understanding to proceed to an evaluation, I will need 3 to 5 years of historical financial data as well as any future projections that may have been made in order to evaluate your business and provide you with a range of value in which I calculate your business will sell. This process will also consider the terms you require, financing options for a buyer, and a review of the current status of your industry.
Within two to four weeks, I will present you with a written, detailed evaluation (a value range) and my initial strategy for selling your business. Further, the package will include an Engagement Letter (including a fee schedule), the form of Non-Disclosure Agreement (NDA) to be used and any necessary documentation specific to your business.
The primary and a significant difference between using Bowman, LTD and a real estate broker or main street business broker is that I rarely advertise your business or place an asking price on it. I create a target list of potential buyers (usually 50 to 100) from your industry or related industries and from private equity groups which are contacted directly. This results generally in more professional, business oriented and well-funded potential buyers with no upside ceiling created by an asking price.
After the meeting during which the items described above are discussed in detail, we will need to decide if you will engage Bowman, LTD to sell your business. If so, the Engagement Letter will be executed.
Bowman, LTD will then prepare a Confidential Information Memorandum (CIM) describing the business. The purpose of the CIM is to present enough information and data to allow a potential buyer to make an offer. (I do not place an asking price on the business.) During this period, I may use other experts (all working under NDAs) to assist me in developing a highly effective CIM. You will have the opportunity to review the CIM and provide input and approve it. This process can also take up to a month or more for a large, complicated entity.
Bowman, LTD will develop a target list of potential buyers, and market through phone contact and a “blind teaser”, formally called a Confidential Information Memorandum. The identity of your company will not be disclosed. This summary will be sent to those on the target list.
Beyond this stage, the following occurs:
- Interested potential buyers sign NDA’s.
- Buyers are sent the CIM and/or are given access to a virtual data room.
- Written Indications of Interest (I.O.I) may be received. These are non-binding. This stage may also proceed as verbal expressions of interest.
- Meetings between Seller and potential Buyers begin. *
- Letters of Intent (L.O.I.) may be received. While non-binding, the LOI provides a road map to closing the transaction.
- Thereafter, and concurrently, Due Diligence and the drafting of a Purchase and Sale Agreement, (PSA) are commenced.*
- The PSA is executed and a closing date set.*
- Due Diligence issues are resolved.
- Closing *
- Post-closing integration and adjustments, if any.
*SELLER MUST UNDERSTAND THAT IT PAYS ITS OWN EXPERTS, LAWYERS, ACCOUNTANTS OR OTHER CONSULTANTS DURING THIS PROCESS. BOWMAN, LTD WORKS BASED ON A SUCCESS FEE ONLY (UNLESS AN INITIAL RETAINER IS REQUESTED). BOWMAN LTD IS NOT PROVIDING LEGAL OR ACCOUNTING ADVICE, NOR DOES IT WARRANT THE INFORMATION THE SELLER PROVIDES FOR THE CIM OR DATA ROOM.
The process of selling a business can take time to prepare the CIM, find the right purchaser and structure a mutually beneficial transaction. Patience and maintaining ongoing, normal, and profitable operations of the business is the Seller’s job.Please advise if you’d like a meeting. If not, I wish you good fortune in operating and ultimately selling your business.
Scott Bowman