An acquisition strategy is best executed in a well-planned manner

and by being selective. The key to successful acquisitions is to understand

the synergy benefits that need to be realised in order to give the acquiring

business a competitive advantage. The buying process begins with an

understanding of the acquisition strategy of the client. Johann can assist in any of

the stages or for the full execution of the acquisition process, which typically involves:

 

CO-DEFINING THE ACQUISITION STRATEGY

The buying process begins with an understanding of the acquisition strategy of the client. He normally meets with the client and co-define the strategic and transaction criteria covering: synergy benefits sought, strategic fit sought, growth areas targeted, key characteristics of acquisition targets, valuation parameters (earnings multiples, investment hurdle rate, goodwill as % of enterprise value, etc.), transaction size, desired transaction mechanism (business or shares, earn-outs, claw-backs, claw-ins, etc.), and financing method (cash, debt, share-swap, vendor finance).

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TARGETING, APPROACHING AND ASSESSING COMPANIES

With a proper understanding of the target companies and the synergy benefits sought from the deals, i.e. the acquisition rationale and transaction parameters, he begins identifying companies from his network or by means of research to find a likely fit. These companies can be approached without disclosing the client’s name at this stage, after which he engages with the interested companies and assesses whether they fit into the client’s pre-defined criteria.

 

EXECUTIVE SUMMARY AND VALUATION

An executive summary (+/- 10 pages) is compiled for consideration by the client’s investment committee. A valuation is also done to analyse the transaction viability for the client.

 

NEGOTIATION PROCESS

The negotiation process starts with Johann on board to assist in facilitating these discussions in two key ways: designing transaction mechanisms to bridge transaction expectation gaps, and working with the seller or buyer throughout the process.

 

TERM SHEET AND DUE DILIGENCE

The term sheets are drafted and facilitated. He 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

Transaction structuring with high-level tax planning is done to engineer a transaction suitable to all the parties.

 

FINALISING THE TRANSACTION

Johann works closely with the legal advisors when the contracts are drafted to make sure that the commercial intent negotiated between the parties is accurately reflected.