How to Find and Buy a Business - Step 4, "Concur"
Jay Carter
Pre-Transaction M&A and Capital Raising Consultant | Business Valuation | Exit Planning | Strategic Planning | Enhanced Valuation & Marketability | Reduced Risks for Successful Sale or Capital Raise
As I discussed in the previous issues in this series of The MarketView Minute, there are 5 steps to finding and buying a business.?
In Step 1, Define, we discussed carefully defining what it is you are looking to buy.?
In Step 2, Discover, we discussed creating an expansive Initial Target List of potential acquisition targets.
Step 3 involved making a Connection with the potential acquisition targets.
Now it’s time for Step 4, Concur.?At this point in the process, you have connected with as many targets as possible and through initial discussions with the acquisition target’s owners, and you have narrowed your list down to a few interesting candidates.?In the Concur step, it is your job (together with the acquisition target’s owner) to agree on transaction terms that are suitable to both parties.?
During the concur step, a lot of information is exchanged between the target and buyer under the protection of a Confidentiality and Non-Disclosure Agreement. ?The buyer and seller will collaborate to ?create a Letter of Intent (“LOI”), a mostly non-binding agreement whereby both parties agree to move forward and make their best efforts to close the transaction.?
Important elements of the Letter of Intent are descriptions of :
1.??????Transaction Value (Purchase Price)
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2.??????Transaction Structure (Stock Purchase/Asset Purchase)
3.??????Payment Structure (When and how payments are made to seller)
4.??????Closing Date (Target closing date for the transaction)
5.??????Exclusivity (Limitations on seller’s activities during a period of time, e.g. 90 days)
6.??????Termination (How either party may terminate the LOI)
Maintaining momentum through this step involves great communications between the parties.?
Great communications are frequent, they are clear, and they are timely.
In the next episode of MarketView Minute, we’ll cover Step 5 in the process of Finding and Buying a Business.?Step 5 is called “Close”.?
If you have questions or would like to discuss your unique situation, please scan this QR Code to download my contact information and feel free to reach out anytime.?Thank you!????