HERE ARE 30 REASONS THAT YOU SHOULD USE ASPEN GROVE INVESTMENTS
1. Develop, Validate and Document Historical and Projected Financials
Aspen Grove Investments will help the company recast historical numbers to add back discretionary expenses and model future performance. Projections should be realistic – a buyer might predicate his price on them – and must include underlying assumptions as to what capital and other resources will be needed.
2. Obtain Agreement Regarding Expectations of Value and Terms
Aspen Grove Investments’ first task is to ensure that we and our prospective client concur on value, which need not be a firm number – it may be a range or ratios pending future performance, and will depend on terms. The market will ultimately determine value, but expectations need to be mutual.
3. Help the Client Understand How a Potential Buyer Will View the Company
Most companies are sensitive to how they are perceived by customers, suppliers, employees and the community, but haven’t focused on the unique perspectives of potential buyers. Aspen Grove Investments and our client must develop a mutual understanding of why and where a potential buyer will see value.
4. Candidly Assess the Prognosis for Future Challenges
Aspen Grove Investments must drill down to unearth any issues that could emerge at an inopportune time. If there are any potential problems related to the company and its business, they need to be discussed candidly and early in the process. Even a relatively minor issue can kill or reduce the value of a good deal if it crops up at a critical point in the process.
5. Assist in Recruiting Other Members of the Team Not Already on Board
A sale transaction requires attorneys and accountants with experience commensurate with the anticipated transaction. Mistakes or oversights can be expensive and/or kill deals. This is not where to cut costs, and you don’t want to wait until there is a deal on the table. Aspen Grove Investments can help in recruiting or selection.
6. Prepare Documentation to Market the Company
Aspen Grove Investments will prepare two stages of marketing documents: a concise summary containing enough to arouse interest without revealing identity; and a comprehensive book or memorandum.
7. Identify and Evaluate Potential Categories of Buyers
We will work with you to determine who is likely to buy the Company at the desired price and terms. There are financial buyers (investment groups) synergistic buyers (reduction of costs or regional concentration) and strategic buyers (companies in related businesses). The “right market” depends on the type, size and location of the business and the desired terms. A lot of time can be wasted chasing the wrong market.
8. Develop Marketing Strategies
There are three basic M&A marketing strategies: tightly focused to a select few; strategically focused to a limited number; or broadly to a large audience. The selection depends on the type of business, location, confidentiality and the type of buyers targeted. Aspen Grove Investments’ goal is to create an auction, or alternately obtain a preemptive bid.
9. Identify Specific Potential Buyer
Aspen Grove Investments’ next task is to identify and prioritize specific potential buyers. A strategic buyer at least twice your size is ideal, but smaller divisions or subsidiaries of even very large companies should be included, as should financial buyers with other investments in the same industry.
10. Obtain Firsthand Introductions to Potential Buyers Wherever Possible
Aspen Grove Investments’ goal is to obtain personal introductions to decision makers of potential buyers. Accountants, attorneys or banks whom we know often will have relationships that can get past the gatekeepers, which is especially useful in approaching large organizations.
11. Initiate Contact with Potential Buyers
Aspen Grove Investments’ initial approach to potential buyers is critical. Once the prospect has said no, it’s hard to go back. Initial contacts require tenacity and skill. Whether by phone, letter or e-mail, we need sizzle to get attention but also cover the essential facts. The pitch must be well honed and get the message across quickly. We also seek to establish trust with the Buyer and to learn why they may be interested so that we can tailor our future discussions to their interests/needs and emphasize how your company meets those desires.
12. Obtain Signed Confidentiality Agreements
Aspen Grove Investments’ ensuing objective is to obtain a signed confidentiality or non-disclosure agreement (“CA” or “NDA”) so the next step can be taken. The simpler the NDA, the easier it is to get signed. If truly sensitive information is to be disclosed later in the process, a more detailed one can be executed.
13. Provide Prospective Buyers Detailed Information
Aspen Grove Investments’ next step is to send prospects the Confidential Memorandum. We prefer to meet with the buyer personally to go through the Memorandum to insure understanding of the information, answer questions and build further trust and understanding of the buyer. If we cannot arrange for this due to distance it is preferable to send hard copy. E-mailed documents tend to be disseminated, raising the risk of leaks.
14. Research and Qualify Interested Potential Buyers and Principals
Before a visit, Aspen Grove Investments will dig into the backgrounds of the buyer, its culture and its history, particularly with respect to prior transactions. Such information enables the Company to ask the right questions and understand why the buyer might be interested. If it doesn’t look like a fit, better to find out sooner than later.
15. Obtain Indications of Interest and Arrange Site Visits
Aspen Grove Investments’ follow-up starts soon after the Company’s information is received. Common responses are requests for more information and/or referrals to other people. Aspen Grove Investments will carefully control what information is disseminated and which is deemed to be delivered during due diligence, after an offer or letter of intent have been executed. Our goal is to get the prospective buyer to commit to visit the Company and to meet our client. If they won’t, they are probably low priority prospects.
16. Prepare the Company for the Buyers’ Visits
Aspen Grove Investments will obtain the buyer’s schedule in advance so everyone involved is focused and well-prepared. The Company’s participants must be selected and a plan formulated and rehearsed as to what will and will not be said, offered or provided, and how to handle sensitive questions. Customized presentations for each buyer are prepared to ensure that we are addressing the interests and needs they have expressed.
17. Orchestrate the Buyers’ Visits
Don’t assume they have read the information. Start with an overview, but most of the time should be spent answering questions, and listening. Requests for information should be noted but not necessarily filled on the spot. The owner should not dominate the visit. We need to see a team. Aspen Grove Investments will be active or passive, as needed, but will be there.
18. Create the Infrastructure for Maintaining Momentum
Deal momentum is critical. Aspen Grove Investments must assure that the visit ends with a definitive schedule of next steps and agreement as to who is responsible for each step. The buyer should designate one accessible point person, ideally either a decision maker.
19. Police the Flow of Further Information Between Company and Buyers
Assuming continuing interest, the next thing that happens is requests for more information. Aspen Grove Investments will serve as a control for incoming requests, which will help identify emerging negotiating issues. Careful consideration must be given to what is provided, especially projections, and records kept as to everything provided.
20. Obtain Positive Indications of Value and Terms
Requests for more information can be an unending fishing expedition. Within 30 days, Aspen Grove Investments will inform all of the buyers that the Company needs some form of proposal term sheet, letter of intent – with at least an indication of value. If more information is required, it should be reduced to a manageable list and timetable.
21. Evaluate Alternative Proposals
Proposed payments come in all different forms – cash, stock, notes, non-competes, earn outs, etc. Some may offer to buy assets, others stock. Some may want to leave behind some assets (e.g. real estate) or liabilities. Aspen Grove Investments’ job is to help evaluate the different deal structures in the context of the seller’s needs and tax circumstances in conjunction with your deal team.
22. Negotiate a Term Sheet or Letter of Intent (“LOI”)
Aspen Grove Investments will interface with the buyer on an LOI, but the attorneys also need to be involved. Traps to avoid are 1) Agreeing to a “stop-shop” clause without milestones; 2) Letting an LOI turn into a mini-agreement and 3) Going directly to a full sale agreement without an LOI or at least a term sheet.
23. Prepare Company for Due Diligence
Deals die because due diligence drags out. Aspen Grove Investments will orchestrate the preparation. Ninety percent of what will be needed is predictable and should be located in advance, which is never as easy as first thought. A common practice is to create an off-site “document room” where documents are accumulated and organized for inspection.
24. Organize the Due Diligence Process
Due diligence can be disruptive and unproductive. Aspen Grove Investments can serve as either the quarterback or coach. There must be a plan identifying who is responsible for what and how sensitive issues are sequenced (e.g. talking to customers and discussing retention with management until after the buyer has signed. off on all other items).
25. Manage the Due Diligence Process
A key to managing the process requires understanding the buyer’s needs and clarifying what is really required. In addition to seeing documents, buyers want to talk to managers in human resources, IT, production, Q/C, purchasing, marketing, engineering, as well as administration and finance. Such managers must be briefed and prepared with answers. These issues should have been dealt with during the Ownership Transition Planning Process, if one was completed.
26. Continually Track Progress and Open Issues
As due diligence proceeds, additional issues arise which should be tracked and the authority for concessions clearly defined. Significant monetary and legal issues should be settled in real time to maintain momentum and avoid deal fatigue resulting from numerous unresolved issues. It is also important not to get “nickeled and dimed” by a buyer into a succession of concessions that lead to a less than optimal transaction.
27. Help Compile the Disclosure Statement
A disclosure statement is a compilation of documents, e.g. contracts, leases, deeds, patents, asset schedules, shareholder records, insurance policies, orders, etc. Compiling these documents is never easy. Since they are part of the contract, the sellers are warranting that they are correct and complete. An error or omission can be expensive.
28. Help Compile Other Closing Deliverables
Aspen Grove Investments will also assist in obtaining the numerous other “closing deliverables” from outside sources, e.g. consents of shareholders, lenders, landlords, leasing companies, insurance carriers, customers or government agencies; lien releases; good standing and tax clearance certificates, etc. One missing document can kill a deal.
29. Assist Negotiating Business and Financing Issues in the Definitive Agreement
The definitive purchase contract and related documents (notes, security agreements, consulting or employment contracts, non-competes, licenses, leases, etc.) are the purview of the attorneys, but also include personal or financing and deal structure issues on which Aspen Grove Investments can help the Company evaluate options and make decisions.
30. Stay Until the End
Aspen Grove Investments will remain on the scene, or duty, until the deal finally closes, even if it’s midnight New Year’s Eve, or one year later. There are many things that can be missing or go wrong at the last minute, and having been there numerous times before, Aspen Grove Investments is just the firm to help.