Aquiring a business
Maximise the opportunity of value-enhancing acquisitions
Our acquisition process
Co-defining the acquisition strategy
The buying process begins with an understanding of the acquisition strategy of the client. We meet with the client and co-define the strategic and transaction criteria covering: synergy benefits sought, strategic fit sought, growth areas targeted, key characteristics of acquisition targets, valuation parameters (earnings multiples, investment hurdle rate, goodwill as % of enterprise value, etc.), transaction size (rands), desired transaction mechanism (business or shares, earn-outs, claw-backs, claw-ins, etc.), and financing method (cash, debt, share-swap, vendor finance).
Targeting, approaching and assessing companies
With a proper understanding of the target companies and the synergy benefits sought from the deals, i.e. the acquisition rationale and transaction parameters, we begin identifying companies from our networks or by means of research to find a likely fit. We approach these companies without disclosing our client’s name at this stage. We then go through a process of engaging with the interested companies and assess whether they fit into the client’s pre-defined criteria.
Executive summary and valuation
We then compile an executive summary (+/- 8 pages) for consideration by the client’s investment committee. A valuation is also done to analyse the transaction viability for the client.
The negotiation process starts with Pollination Capital on board to assist in facilitating these discussions in two key ways: designing transaction mechanisms to bridge transaction expectation gaps, and guiding the seller through the process (if inexperienced).
Term sheet and due diligence
The term sheets are drafted and facilitated. Pollination Capital also assists with the preparation of due diligence (assisting in getting data room ready if needed) and the closing-off of due diligence (assisting with any outstanding issues).
Transaction structuring with high-level tax planning is done to engineer a transaction suitable to all the parties.
Finalising the transaction
We work closely with the legal advisors when the contracts are drafted to make sure that the commercial intent negotiated between the parties is accurately reflected.