The Process
The Process
Merger and Acquisition Process Overview
1. The Following Items Need to be Addressed in Preparing a Company for Investment or Sale:
ITEM #1
Pass a corporate resolution authorizing the sale.
ITEM #2
Ensure corporate legal structure is in order.
ITEM #3
Ensure past 5 years corporate business tax returns are available for due diligence.
ITEM #4
Ensure year to date balance sheet is available.
ITEM #5
Ensure year to date income statement is available.
ITEM #6
Ensure year to date cash flow statement is available.
ITEM #7
Prepare furniture, fixture and equipment sale list for review.
ITEM #8
Ensure historical financial performance will be the basis to determine company’s purchase price.
2. Identify, Locate and Financially Qualify Buyer Candidate(s).
Buyer candidate(s) sign confidentiality agreement.
An information memorandum package is provided to prospective buyer(s).
Buyer candidate(s) move forward with letter of intent.
Transaction negotiations are initiated.
Purchase proposal is accepted.
3. Due Diligence Process
4. Purchase and Sale Agreement
A finalized, binding agreement between the purchase company and the target company, detailing the terms of the transaction.
The Main Clauses in a Purchase and Sale Agreement Are:
- Purchase consideration and adjustments
- Transaction structure (stock)
- Solicitations (non-compete, non-shop)
- Indemnification
- Financing contingency
- Closing conditions
- Termination and defaults
- Management agreement contracts