Our Business / Buying a company

Adams & Royer has been advising corporate acquirers for more than 20 years. Our buy-side clients generally are either:

small high-growth companies with innovative technology that need to attain a critical mass quickly and have chosen to do so via acquisition, or

large companies that are expanding existing markets via add-ons or that are diversifying in terms of territory, technology, or markets.

 

In either case the process has nine steps:

 

(1) Define Strategic Objectives:


We need to understand what our buyer client is seeking to accomplish before we begin to work on any project. For example, are we buying market share, reducing competition, consolidating an industry, broadening a product base, entering new markets etc. When objectives, geographic constraints, financial parameters and time frame are well understood, we are prepared to move ahead.

 

 

(2) Define Profiles of Potential Targets:


We next compose an idealized profile of a preferred target. This is a prioritized, best-of-all-worlds wish list.

 

 

(3) Identify Promising Targets:


With the wish list in hand we start to analyze potential real world synergies with actual targets.

 

 

(4) Initial Contact:


When we make first contact with a potential target our objective is to introduce the buyer and to evaluate the target’s initial reaction/level of interest to completing a transaction with our client.

 

 

(5) Evaluate Targets:


After several targets have been contacted we rank them in terms of our impression of their level of interest in pursuing a sale and then revisit most to verify our data about products, markets, financials and possible synergies.

 

 

(6) Analyze trade-offs between Cash Flow and Price:


We also rank all targets that have expressed initial interest to compare their potential for increasing our client’s earnings with the cash outlay likely needed to obtain those earnings.

 

 

(7) First Meeting:


The first meeting is usually held at the target’s location. The most important task at this stage is to evaluate the target’s management and to consider who might be included in a future management team. Differences in business practices and management styles can sometimes derail transactions in the early stages, especially in cross-border deals. Our familiarity with how business is conducted in different countries frequently helps to eliminate potential misunderstandings.

 

 

(8) Structure a Proposal:


Following initial meetings, we identify one prime and one secondary target. We then work with our client to design a proposal that will be acceptable to the prime and/or the secondary target.

 

 

(9) Negotiate the Deal:


Once our negotiating strategy is in place, discussions commence with the prime target. Naturally we prefer a private discussion; however, if the target elects to hold an auction our objective is to have our client short-listed for the final negotiation. If it is, we start to define the elements of a Letter of Intent. Thereafter we follow the process (counter-offers, final offer, contract of sale, financial analysis) through to the final closing.

 

ADAMS & ROYER