I have recently been asked to prepare a proposal for a client regarding a sale mandate. I wanted to create a presentation using my Six Minute Strategist methodology to explain the sale process and how I would go about it.
It then struck me that this might be of interest to my fellow bloggers and readers so here is part 1 of 2
The Six Minute Strategist Mini Guide to Selling a Company
This is the top level hexagon.
The Six elements of the process are:
In this Part 1 I will cover the first three and in Part 2 I will then cover the second three. I will also post the whole presentation on Slideshare to make it easy to download – under a creative commons licence.
Stage 1 – Planning Stage
1. Core Team – Agree core transaction team – adviser, external and internal shareholders – key to managing impact on management and employees
2. Objectives – Establish the objectives of the sale process
3. Options – Consider the range of options – merger, spin off, sale to strategic partner, sale to financial partner, recapitalisation, acquisition, IPO, status quo
4. Approach – Evaluate the approach to the sale process; targeted rifle shot, limited auction, broad auction
5. Consensus – Agree the objectives of all shareholders and ensure that there is a consensus; management commitment of time to the process is essential; future of management post sale
6. Other Advisers – Agree on accounting and legal advisers – appoint when appropriate
Stage 2 – Preparation
1. Positioning – Establish company positioning and selling thesis
2. Documentation – Prepare and verify documentation – teaser, information memorandum, financial projections, sale process letter, list of data room contents
3. Management Presentation – Prepare management presentation for potential buyers – an opportunity for management to showcase themselves as much as the company
4. Data Room – Prepare data room for the due diligence process; legal, accounting, environmental, pension, contracts and loan agreements (change of control), regulatory issues
5. Communication – Consider PR and internal communication issues
6. Timetable – Agree timetable for the process – evaluate impact of public holidays and management vacation plans
Stage 3 – Partners
1. Positioning – Establish the market positioning of the company
2. Company USPs – Identify and classify its USPs and strategic positioning
3. Segment Matching – Match the company to the broad market and compatible segments of the market
4. Segment Extension – Identify adjacent categories where the company can offer product, service, geographic or sector extension to a potential partner
5. Long List – Screen databases to create long list of potential partners
6. Tiered Short List – Narrow Long List to Tier A and Tier B short list of potential partners – on a global basis
In the style of the Six Minute Strategist, this outline is brief and I hope it provides a helpful structure to anyone considering a company sale.
I have uploaded the Presentation to Slideshare.
Please contact me or leave a comment if you find this interesting. In my next post I will cover Proceeds, Process and Proposal.