M&A – Buy or Acquire2022-11-23T00:42:46-08:00
Mergers and Acquisitions

Buy-Side Advisory

The Acquisition

Grow your business through savvy acquisition.

Picture the snowball in the proverbial ‘snowball effect’ – a process where an entity starts small, builds momentum, builds upon itself and becomes larger and larger, gaining matter, adding outside influence and experience to its burgeoning structure, as others watch, step out of the way, and sigh with awe.

Now, replace ‘snowball’ with ‘your business’, and the analogy holds just as much metaphoric power when we’re talking growth through acquisition.

Most business owners build their company one step at a time, so how do you create the snowball effect? It’s all in your buy-side strategy – the steps you take to find the right business to buy, so that yours can absorb its capabilities – it’s matter – so the business can build upon itself.

Now, there’s much to be said about building your business organically. It’s cheaper by a 3:1 margin.  But this isn’t only about growth, it’s about expansion into other markets, geographies, products, services or talent pools.

It starts, though, with ensuring your business is acquisition ready. Destined is here to help with our 3-step approach – Chart, Propel, Savor. This simple process will provide you with the solid foundation you need to define your business acquisition strategy. Determining your readiness for growth, and identifying the right type of acquisition, is the first step toward realizing your vision and expected business legacy.

But first things first – as your acquisition specialists, we want to chat a little about the actual buy-side services we provide. Let’s get that snowball rolling.

The Acquisition Strategy

Get your business acquisition ready.

Destined’s simple process will provide the solid foundation you need to define your business acquisition strategy. Determining your readiness for growth, and identifying the right type of acquisition, is the first step toward realizing your vision and business legacy.

What

An acquisition strategy is a plan that maps out how a business will approach acquiring another business.

If you’re considering an acquisition, you’re either looking to grow sales or strategic assets. Using the Chart-Propel-Savor approach, this strategy determines whether that business is ‘growth ready’ – or in a position to manage growth.

Why

An acquisition is more likely to be successful if a business follows a plan throughout the process.

It helps them analyze the pros and cons of each acquisition opportunity and make the best decision possible based on the strategy.

How To

To begin developing an acquisition strategy plan, start with these two steps:

1. Prepare for bigger things.
Create a strategic growth plan for your business to ensure your competencies match your growth scope.

2. Seek the right merger.
Identify potential acquisition targets that align with your business vision, culture and values.

What is the role of a buy-side M&A advisor?

As your buy-side mergers and acquisitions advisors, we make sure the deal progresses smoothly.  We’ll guide you on this exciting journey with a custom crafted strategy, one that considers your business’s vision, mission, and values, as well as your personal goals for the organization.

Explore the steps we’ll take to help you find the right acquisition opportunity.

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Frequently Asked Questions

A quick buy-side services recap.

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What is buy-side M&A?

Buy-side M&A is when we work with you to find opportunities to capitalize on through a merger or acquisition of another organization.

We begin with an “acquisition thesis”, fancy language for documenting your vision for exactly what you want to acquire and why. Thus, throughout the due diligence process we are guided by your vision as we identify the opportunity that will move you towards your destiny.

Due diligence is a thorough process and will include:

Deal valuation,
Coordination of all due diligence processes,
Examining opportunities, threats, risks, and value drivers, and
Transaction structure and management of legal and tax matters.

We know that buying a business isn’t just a transaction – it’s an investment into your future. An important step toward achieving your vision by absorbing additional capabilities and assets.

What is the buy-side process?

The buy-side advisory process can be broken down, as follows, at a high level.

Firstly, target identification and engagement. This is followed by preliminary diligence, valuation, and indication of interest, which is swiftly followed by further diligence and letter of intent. The process is then wrapped-up by final diligence, negotiations, and completion of the transaction, to seal the deal.

What are the buy-side M&A phases?

When your business is ready for an acquisition the buy side m&a process can be divided into multiple phases:

Target Identification and Engagement

This is where we reach out to the target business. We establish your interest and gauge the interest of the buyer. Once both sides are on board, preliminary discussions can start.

Preliminary Diligence, Valuation, and Indication of Interest

In this step, your buy side m&a advisor will conduct all the due diligence required, including analyzing financial statements and other documents. We will then arrive at a valuation of your target business, allowing you to formally submit an ‘indication of interest’.

Further Diligence and Letter of Intent

While the seller evaluates your interest, we continue to conduct additional diligence. Should the seller accept your interest and agree to a sale, we then submit a letter of intent to spark further discussions.

Final Diligence, Negotiations, and Completion of the Transaction

As your m&a buy side advisor we conduct final diligence and secure any necessary financing. This will be done with full access to the target to ensure things go smoothly. Once financing has been secured, we will conduct any last-minute negotiations necessary, submit the definitive document, and finalize the purchase.

Due Diligence and Valuation Methods

This one’s a vital part – here we’ll need to ensure that all matters of cash flow, transactions, financial dealings and an acquisition target’s relevance in the marketplace fits neatly with your expansion vision – basically, the vision you have for your snowball, and its health after absorption.

Destined deploys four slick analyses to put your mind at ease, when the money matters come up:

Discounted Cash Flow Analysis

An income-based valuation technique that values the target based on the present value of its expected future cash flows.

Comparable Public Companies Analysis

A market-based approach that values the target by comparing it to similar businesses with a public, established value.

Precedent M&A Transactions Analysis

Another market-based approach, it values your target business based on prices paid for similar companies in the past.

Leveraged Buyout Analysis

Similar to discounted cash flow analysis, this is an income-based method that focuses on the target’s ability to generate cash flow.

Negotiating the Merger Terms

This is the final stage of the M&A transaction. Once you complete the steps mentioned above, all you need to do is sign the relevant documents, pay the agreed-upon cost, and complete the transaction.

Who is the target of an acquisition strategy?

An acquisition strategy is targeted at businesses that your company may be looking to merge with or buy.

What are the benefits of an acquisition strategy?

An acquisition strategy plan helps a business achieve a smooth acquisition and transition by identifying risk factors and considering how to mitigate those risks in advance.

Why a business should consider acquisitions?

There are several reasons a business acquisition can be the right move for your company.

The right merger or acquisition can provide economies of scale, diversify business operations, capture a greater market share, assist in entering new markets, help gain access to new technology, or promote consistent business growth.

Not ready to merge or acquire?

Even if you’re not ready for a merger or acquisition, the Destined team can help you to determine the right time so you can begin planning for the future.

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