What Does the Buy-Side Merger and Acquisition Process Look Like?

What Does the Buy-Side Merger and Acquisition Process Look Like?

Organic growth is slow, risky, and inefficient. When a company wants to scale quickly, a well-planned acquisition strategy is a critical piece of the puzzle. 

That’s where REAG comes in. We have a proven process to help your business experience rapid growth through acquisition. 

Step 1: Kick-Off Meeting

During this meeting, our advisory team assesses your company’s strengths and weaknesses, refining your preliminary acquisition criteria to determine the required characteristics of a target. The goal of our meeting is to develop an overall profile of potential targets and a set of refinement questions reflecting your ‘must-haves.’ 

We also analyze a preliminary list of targets using the industry NAICS codes and high-level acquisition criteria including revenue, number of employees and geography. We want to hear you discuss the pros and cons of each potential opportunity and ultimately prioritize this list on a target-by-target basis. 

Keep in mind, your criteria is refined throughout our entire process based on deal flow and the conversations you have with potential targets. Our process is fluid and allows us to pivot to capture market opportunities as they arise.  

Step 2: Research and Analyze the Target Industry 

REAG is continually researching and monitoring industry news and M&A activity to gain insight on potential strategic initiatives, trends, and deal activity. This includes researching current deal multiples and deal participants—buyers, sellers, and those financing the deals. 

We reach out to all active deal participants to generate additional potential deal flow. 

Step 3: Create a Marketing Plan 

Next, REAG develops a strategic marketing plan to determine the best distribution channels to reach your ideal targets. 

Distribution channels may include: 

  • Email 
  • Phone
  • Letters
  • Newsletters 
  • Industry organizations 
  • M&A Dealmakers organizations 
  • LinkedIn and other social media 
  • Professional marketing targeting exit planners, accountants, attorneys, lenders, and wealth managers 

Step 4: Approach Targets

Executing the marketing plan we created, we start approaching targets. Our prioritized list will dictate the order and manner in which targets are approached. 

It is important to note that multiple touches are almost always required for success. Throughout the engagement, we continue our multifaceted outreach. 

Step 5: Determine Suitability 

Once initial interest is expressed, REAG initiates a more formal conversation with the target for suitability verification, obtaining answers to the refinement questions developed during the kick-off meeting.

When this conversation is complete, we present the information we’ve gathered for your review. 

Step 6: Conduct Target/Acquirer Call 

Once a non-disclosure agreement is executed, REAG schedules a conference call to introduce you to the potential seller, develop rapport, and continue the vetting process. From this call, we determine whether a formal site visit and face-to-face meeting should be scheduled. 

Step 7: Site Visit and Management Meeting

This is a face-to-face meeting at the target’s location that gives you an opportunity to understand the company’s operations, culture, growth potential, and suitability. The purpose of the meeting is to determine whether or not your company still wants to pursue an acquisition of the target. 

Step 8: Pricing Analysis

If you decide to move forward with the acquisition, REAG will prepare a pricing analysis to guide you on the target’s value, incorporating traditional valuation theory. We then review the analysis together and discuss potential deal structures as well as financing options. 

Step 9: Prepare LOI and Conduct Negotiations 

REAG works together with you and your counsel to develop the LOI and a strategy for presentation and negotiations. We present the LOI to the target and work alongside your counsel and accountant to achieve the best possible transaction terms. 

Step 10: Coordinate Due Diligence 

We assist you, your counsel, and your accountants in gathering and distributing due diligence information. Using a secure online data room, we request, obtain, store, and distribute documents efficiently among the deal teams. 

Depending on the findings of your legal and financial due diligence personnel, we refine our pricing models and negotiate with the target. 

Step 11: Introduce Lending Sources 

REAG maintains numerous relationships with senior debt, mezzanine debt, and private equity capital sources. We can introduce these sources as appropriate based on your needs and the structure of the transaction. 

The final step in the process is closing. REAG facilitates the actions needed to successfully complete the transaction and transfer of ownership. 

Ready to Grow Through Acquisition? 

Reach out to schedule a discovery call with our advisory team.