How to handle an unsolicited approach from a buyer

Confidential© Equiteq 2016 equiteq.com

Growing equity, realizing value

How to handle an approach from a buyer - ‘Bid Defence’


Agenda

2

Introductions Q&AWhat to do


It is quite likely your sale will arise from an approach by a buyer….

Property ConsultingSold to

Advised on the sale2015

Brand/ Media ConsultingSold to

Advised on the sale preparation and sale

2015

Strategy ConsultingSold to

Advised on sale preparation and sale

2015

Financial Services ConsultingSold to

Advised on the salepreparation and sale

2015

Strategy/Leadership ConsultingSold to


Corporate IntelligenceSold to


2015 / 2016

IT Consulting, IBMSold to


Regulatory ComplianceSold to


SAP GRC ConsultingSold to


2015

Health Strategy ConsultingSold to


Engineering ConsultingSold to


2016

IT ServicesSold to


IT ConsultingSold to


Oil & Gas ConsultingSold to


2014 / 2016

IT Strategy and AnalyticsSold to


Online MarketingSold to


Operations ConsultingSold to

Advised on the sale 2016

Market Research ConsultingMerged with


67%33%

Full Process

Data covers Equiteq deals in Europe and US over past 18 months

Bid Defence


…though it is no guarantee an approach will lead to a completed transaction

4

Typical ‘Target Waterfall’ for Regular M&A Buyer

30

0

10

5

Sign NDA

30,0

Make Offer Sign LOI Close DealInitialConversation

1,02,0

10,0

1,1

-67%

-90%

-45%


How can I maximise the opportunity from an interested acquirer?


1. Fully understand the realistic value of your business as a basis for evaluating any offer

6

Valuation Range with Synergy Probability of Sale Based on EGA Score

Best Alternative to This Negotiated Agreement (BATNA)

Confidential© Equiteq 2016 equiteq.com 7

2. Don’t disclose too much information too early you only have one chance to make good first impression

Management Accounts Business Presentation


3. Ensure your initial data share presents the business in the best possible light

8

0

500

1,000

1,500

2,000

2,500

3,000£000s

Revenue/Margin Synergy

Potential EBITDA

Adjusted Cost Synergy

Reported

+238%


4. As you share data, focus on the attributes you have that would be valuable to the acquirer


5. Focus on what you are worth to the buyer, and quantify

10

Stand Alone EBITDA Synergy EBITDAStand Alone Revenue Synergy Revenue

£m

Prior Year - 3 Prior Year - 2 Prior Year - 1 Current Year Future Year +1 Future Year +2


6. Consider making the initial price suggestion…’anchoring’ …but ensure it is based on fact

11

ZoneZ

ofO

PossibleP

AgreementA


7. Understand deal structures that are possible…and only progress to exclusive Due Diligence with a LOI with commercials clearly detailed and relevant disclosure

presented

12

Cash and/or Shares

Earn out

Cash and Debt Adjustments

Vesting, Put/call options

Metric Target and start point

Included/excluded Seller control

Cross-charging Etc.

Employment Agreements

Non-Compete Clauses

Tax Liabilities (and Credits)

Current and Projected Performance

Etc.


8. Don’t go on the process alone - you are likely to sell your business only once, so ensure you are well guided on the journey

13


In Summary

14

Fully understand the realistic value of your business01

Don’t disclose too much information too early 02

Present the business in the best possible light03

Focus on the attributes that would be valuable to the acquirer04

Focus on what you are worth to the buyer05

Consider making the initial price suggestion06

Understand deal structures that are possible07

Don’t go on the process alone08


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Date post:	21-Mar-2017
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