Our business sale process
Co-defining the strategic and transaction criteria
Our selling process begins with understanding the competitive advantages of the client and what type of corporate buyer can extract synergy benefits from those. We will meet and co-define the strategic and transaction criteria, covering: synergy benefits sought, strategic fit sought, key characteristics of potential acquirers, valuation parameters (earnings multiples, investment hurdle rate, goodwill as % of enterprise value, etc.), transaction size (rands), and desired transaction mechanism (business or shares, earn-outs, claw-backs, claw-ins, etc.).
Targeting, approaching and assessing companies
This stage involves gaining a proper understanding of the targeted acquirers and the synergy benefits sought from the deals, i.e. the acquisition rationale and transaction parameters. We begin sourcing 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.
A one-page teaser is compiled, containing salient information such as financial history, forecast, high-level revenue model, product and service offering, geographic presence, etc. The one-pager is presented to the potential acquirer. The target’s name is not disclosed at this stage. The potential acquirer decides if such a transaction will be attractive, after which we arrange for an NDA to be signed between the parties.
Executive summary and valuation
We then compile an executive summary (+/- 8 pages) on the target for consideration by the potential acquirer. A valuation is also done to analyse the transaction viability for the client.
The negotiation process starts and Pollination Capital assists in facilitating these discussions in three key ways: designing transaction mechanisms to bridge transaction expectation gaps, guiding the seller through the process (if inexperienced), and facilitating the dialogue between the seller and acquirer.
Term sheets 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.
We work closely together with the legal advisors when the contracts are drafted to make sure that the commercial intent negotiated between the parties is accurately reflected.