39 min
Pick Your Partner - The Exclusivity Phase Middle Market Mergers and Acquisitions by Colonnade Advisors
-
- Management
We are excited to focus today’s episode on the final phase of our unique 16-week sales process.
Today we are focused on phase four: exclusivity/documentation.
We invite you to listen to episode 001 for more information about phase one (pre-marketing), episode 002 for more information about phase two (go to market), and episode 0016 for more information about management meetings: https://www.coladv.com/podcasts/002/
Other episodes dive deep into technical aspects and tactics used in middle market and mergers and acquisitions. We also invite you to download our 16-week sales process timeline for more information on how Colonnade Advisors typically approaches the process of selling a company: https://coladv.com/wp-content/uploads/Four-Phases-with-graphic.pdf
In our deep-dive discussion on exclusivity/documentation, the word “scary” comes up quite a few times. Rather than being scary from a horror film or haunted house, this scary is more like cold feet before a wedding.
That’s because exclusivity/documentation is when you pick your partner and take a leap of faith with a single buyer.
You’ll learn that in this phase of the sales process, we are not yet on the homestretch. In fact, our discussion unveils the many challenges of this phase of the sales process that must be simultaneously and actively managed.
You’ll hear that this phase of the sales process almost feels like a crescendo.
Our job at Colonnade is to manage this increasing set of workstreams and pull off a successfully closed deal. Then, as you’ll hear in the podcast episode, it’s time to celebrate.
Key topics covered in this episode:
• Preparing for the shift of power from seller to buyer
• The importance of the letter of intent ("LOI") negotiations
• How to select the winner (while keeping others warm in the background)
• Who’s involved during the exclusivity/documentation phase
• How long the process takes, and how much it costs
• Pitfalls that we have encountered during this phase and how Colonnade mitigates these risks with our clients
What is the exclusivity and documentation phase, and how do you get up to this point? (01:07)
Gina: "This phase occurs when a seller is exclusive with a single buyer—we have received several bids and determined the winner. Both parties sign an LOI at this phase, and the seller agrees not to provide information or engage with any other potential buyers. The seller is essentially going off the market, which can be a bit scary because if the deal does not move forward with the exclusive buyer for some reason, then we will have to go back to the other bidders."
What tasks need to be completed during the exclusivity and documentation phase? (02:11)
Gina: "During exclusivity and documentation phase, we work through the confirmatory due diligence, which often involves a buy-side quality of earnings report. Also, during this period, we negotiate, finalize and execute the definitive purchase agreements and work through any related regulatory tasks to close."
Is it possible for sellers to go through the exclusivity and documentation phase with multiple potential buyers? (03:18)
Jeff: "In large transactions, it is possible to run multiple parties through this phase, but it typically does not happen in middle market deals.”
What is the importance of the letter of intent (LOI) negotiations? (04:13)
Jeff: "LOI negotiation is critical because we want to nail down all the topics that we think are going to be critical in negotiation and final documentation before we commit to one party. Hammering out these key topics ahead of time also expedites the process."
Is the highest price generally selected as the winner? (05:05)
Jeff: "Business owners do not always pick the highest price. It is also about picking the best terms."
Listen to Colonnade’s podcast episode 007: Striking a Deal: Price & Terms: https://www.coladv.com/podcasts/007/
Once a seller is exclusive with a buyer, is there a b
We are excited to focus today’s episode on the final phase of our unique 16-week sales process.
Today we are focused on phase four: exclusivity/documentation.
We invite you to listen to episode 001 for more information about phase one (pre-marketing), episode 002 for more information about phase two (go to market), and episode 0016 for more information about management meetings: https://www.coladv.com/podcasts/002/
Other episodes dive deep into technical aspects and tactics used in middle market and mergers and acquisitions. We also invite you to download our 16-week sales process timeline for more information on how Colonnade Advisors typically approaches the process of selling a company: https://coladv.com/wp-content/uploads/Four-Phases-with-graphic.pdf
In our deep-dive discussion on exclusivity/documentation, the word “scary” comes up quite a few times. Rather than being scary from a horror film or haunted house, this scary is more like cold feet before a wedding.
That’s because exclusivity/documentation is when you pick your partner and take a leap of faith with a single buyer.
You’ll learn that in this phase of the sales process, we are not yet on the homestretch. In fact, our discussion unveils the many challenges of this phase of the sales process that must be simultaneously and actively managed.
You’ll hear that this phase of the sales process almost feels like a crescendo.
Our job at Colonnade is to manage this increasing set of workstreams and pull off a successfully closed deal. Then, as you’ll hear in the podcast episode, it’s time to celebrate.
Key topics covered in this episode:
• Preparing for the shift of power from seller to buyer
• The importance of the letter of intent ("LOI") negotiations
• How to select the winner (while keeping others warm in the background)
• Who’s involved during the exclusivity/documentation phase
• How long the process takes, and how much it costs
• Pitfalls that we have encountered during this phase and how Colonnade mitigates these risks with our clients
What is the exclusivity and documentation phase, and how do you get up to this point? (01:07)
Gina: "This phase occurs when a seller is exclusive with a single buyer—we have received several bids and determined the winner. Both parties sign an LOI at this phase, and the seller agrees not to provide information or engage with any other potential buyers. The seller is essentially going off the market, which can be a bit scary because if the deal does not move forward with the exclusive buyer for some reason, then we will have to go back to the other bidders."
What tasks need to be completed during the exclusivity and documentation phase? (02:11)
Gina: "During exclusivity and documentation phase, we work through the confirmatory due diligence, which often involves a buy-side quality of earnings report. Also, during this period, we negotiate, finalize and execute the definitive purchase agreements and work through any related regulatory tasks to close."
Is it possible for sellers to go through the exclusivity and documentation phase with multiple potential buyers? (03:18)
Jeff: "In large transactions, it is possible to run multiple parties through this phase, but it typically does not happen in middle market deals.”
What is the importance of the letter of intent (LOI) negotiations? (04:13)
Jeff: "LOI negotiation is critical because we want to nail down all the topics that we think are going to be critical in negotiation and final documentation before we commit to one party. Hammering out these key topics ahead of time also expedites the process."
Is the highest price generally selected as the winner? (05:05)
Jeff: "Business owners do not always pick the highest price. It is also about picking the best terms."
Listen to Colonnade’s podcast episode 007: Striking a Deal: Price & Terms: https://www.coladv.com/podcasts/007/
Once a seller is exclusive with a buyer, is there a b
39 min