DEAL MECHANICS

 Deal mechanics help clients improve sales outcomes and drive bigger deals
faster.
 Deal flow is a term used by investment bankers and venture capitalists.
 The rate at which business proposal and investment pitches are being received.
 In rigid quantitative measure: The rate of deal flow is qualitative & is meant to
indicate whether the business is good or bad.

THE DEAL PROCESS: SELLING YOUR COMPANY THROUGH

AN INVESTMENT BANK
 The ultimate goal of selling your business is to maximize value for you as the
founder.
 An investment banker can help you maximize value by bringing their expertise to
the entire deal process.
 When working through an investment banker, the deal process typically takes
somewhere between 4-6 months.
 A breakdown of the stages in the deal process, including:
1) Pre-Marketing
2) Marketing
3) Diligence
4) Documentation

1) PRE-MARKETING (Length: 2-4 Weeks)

Before you can take your business to market, you and your investment banker
will need to make the necessary preparations, including:
o Cleaning Up Your Financials
o Generating Marketing Materials
o Creating Your Buyer/Investor List

 CLEANING UP YOUR FINANCIALS

It focuses on ensuring company’s internal financial & customer data all neatly tie
together for audit.

 GENERATING MARKETING MATERIALS

 Once your financials are cleaned up, you and your banker will create a
Confidential Information Presentation (CIP) and management presentation.
 CIP includes;
o Historical Financials & Near-Term Forecast
o Customer Analyses
o Product Information
o Market Overview &The Company’s Growth Opportunities
o Organizational/Structural Information
 CREATING YOUR BUYER/INVESTOR LIST
 The buyer list should be a collaborative effort between the banker and you, the
selling company
 Under this, banker and the selling company construct an initial buyer list.

2) MARKETING (Length: 4-8 Weeks)

 When the time comes to take your business to market, you will use the marketing
materials you prepared together with your investment banker.
 Activities in this stage are as follows:
o Make initial contact with buyers (Reach out to buyers with a transaction)
o Execute Non-Disclosure Agreement (NDAs) and send the CIP to
interested buyers
o Qualify buyers
o Conduct management presentations for qualified buyers
o Distribute process letters for next steps
o Receive first-round bids and IOIs

 QUALIFY BUYERS

Some dimensions to qualify a buyer include:

o Overall interest
o Historical experience in the sector
o Financial capacity to make the purchase
o Track record of M&A and historical bidding

 CONDUCT MANAGEMENT PRESENTATIONS

For qualified buyers, the banker will schedule 1-hour management presentations
over conference call to review key concepts from the CIP.

 DISTRIBUTE PROCESS LETTERS FOR NEXT STEPS

Following the presentations, the banker will share a process letter that outlines
the information of buyer in the form of an indication of interest (IOI), as well as
timelines for when they should submit their bid.

 RECEIVE FIRST-ROUND BIDS

Buyers then share their bids directly with the banker, who evaluates them in
comparison with the other bids to determine which parties the selling company
should continue engaging with.
3) DILIGENCE (Length: 3-6 Weeks)

 After receiving first-round bids, founders and bankers will narrow down the buyer
list to 3-5 potential buyers.
 These buyers will then have the opportunity to review additional company
information through a private data room during the diligence stage.
 This stage carries out as follow;
o Accrue and open a data room.
o Schedule half-day, on-site meetings.
o Accept second round bids.

4) DOCUMENTATION (Length: 3-6 Weeks)

 The selling company and their banker should be able to select a buyer from
among the finalists to begin the closing steps.
 These steps involve
o Finalize third-party diligence under exclusivity (uniqueness).
o Review the proposed purchase agreement.
o Create a funds flow spreadsheet.
o Sign the purchase agreement and initiate wire transfers

SUCCESSFUL BUSINESS TO SUCCESSFUL EXIT

 At the end of this period, the outcome for buyers will depend on:
o Combination of Valuation Price,
o Terms of Contract,
o Goals of Founder Post-Transaction.
 An investment bank can help you move smoothly through the process and close
a successful transaction so that deal remains Competitive, Positioned,
Efficient, Confidential and Organized.