When a business owner contemplates a sale of their business, hiring a professional and experienced sell-side advisor can vastly increase the probability of a successful sale, along with minimizing the probability of business performance suffering during what is often a long and complex sales process. Growthink Capital has a time and deal tested process to ensure the efficient accomplishment of these parallel goals.

Discovery

The first step in Growthink Capital’s process is to interview company management and become fluent in the company’s history, business model, competitive environment, tangible and intangible assets, and large market conditions. We also pay particular attention in these interviews to the variable life, legacy, and liquidity goals of company ownership (especially as to a family business owner but also under-ratedly for private equity backed companies as well) from a sale.

Documentation 

Next, Growthink Capital will prepare a confidential information memorandum (CIM) on your behalf. The CIM or “book” is a long-form document that comprises an overview of all facets of the business and enables buyers to quickly understand the value ownership has built.

Creating a strong CIM relies on company ownership providing a variety of documents and data related to the business. Typical information requests include customer and supplier lists; 3-5 years of historical financial statements; SKU reports; employee lists by tenure date, role, and salary; organizational and corporate charts; and software and processes used to run the business. This information is critical in buyers’ evaluation process, and Growthink takes care to position this information in a way that clearly displays value drivers while preserving highly sensitive details.

Distribution

In parallel, Growthink’s distribution team works to create a list of prospective buyers. Depending on the business, buyers may fall into two categories. The first, strategic buyers, include operating companies that look to expand their business through the purchase of other companies. The second, private equity buyers, are in the business of buying and selling businesses. There are a variety of considerations for each buyer group and your advisory team at Growthink will discuss these considerations with you so we can determine in tandem the best list composition for your goals.

Once the buyer list and CIM are finalized, Growthink begins the deal distribution process. Distribution activities involve both emails and phone calls to generate awareness of and interest in a prospective deal. For initial distribution activities, Growthink Capital develops a teaser – or a short, blinded summary of the business – to provide buyers an overview of your business highlights and what you are looking for in a buyer. 

At this stage of distribution, interested buyers will execute a Nondisclosure Agreement (NDA) that provides legal protections for the sharing of information between firms. Once NDAs are executed, Growthink Capital provides buyers with the prepared CIM for review.

The distribution process aims to generate interest among several prospective buyers to the point that these groups submit indications of interest (IOI). These preliminary nonbinding bids give owners an idea of how different groups approach transaction value as well as other key terms and conditions they would look to in a prospective deal.

Execution

Throughout the time leading up to and after bid submission, our deal team will field and address buyer questions about the business; coordinate meetings between buyers and company owners; and discuss with you the relative merits of each prospective buyer.

Ideally, all of this activity leads to an auction-like process, wherein buyers are given transaction value and terms guidance by the Growthink team that results in better terms for company ownership overall. From there, your team will determine a single group with which to advance in an exclusive due diligence process.

Due diligence involves a series of meetings – some virtual and some likely in person – with the buyer team and company ownership and key managers. It also involves a more granular analysis of the underlying data used to populate the CIM. It is at this point that highly sensitive information is shared with a single group that has advanced to this state. The timing of due diligence can be anywhere from 30-60 days and can involve third-party firms (i.e. accountancies, legal counsel, etc.) hired by the buyer to evaluate financials, agreements, and other key business information. 

With the completion of due diligence, a purchase agreement will be signed, funds distributed, and the deal closed.  Very many minefields and pitfalls both need to be avoided and professionally triaged through this entire sales process. Two deal truisms always remain – “time kills all deals” and “there are a few reasons to do a deal, and a hundred reasons not to” – and thus a sell-side advisor’s experience, energy, and perseverance are very often the “tipping” factor as to whether a deal gets done or not.

We look forward to connecting with you to learn more about you and your business, and to discuss with you up-to-date market feedback as to deal pricing and closing probability in today’s markets.