Business Acquisitions
At FLB Partners, we offer flexible solutions tailored to your needs where we can manage specific parts of the acquisition process or take total responsibility from start to finish.
Our Services in Business Acquisitions
- Establishment of acquisition strategy and target screening to identify acquisition candidates.
- Information Gathering and establishing a business case.
- Valuation and formulation of indicative bid.
- Negotiation of commercial terms and aDeclaration of Intent (letter of intent).
- Project Management for Due Diligence, including the procurement of advisers, determination of scope and coordination of stakeholders.
- Basis for decision for management, board and owners.
- Final act, signing and closing.
- Establishment of communication plan in the implementation of acquisitions.
- Calculation of final purchase price including net debt and normalized working capital.
- Integracija of the acquired company.
- Purpose: Describe how the acquisition will support the company's strategic objectives.
- Acquisition criteria: Specify the criteria to be applied when evaluating potential acquisition objects.
- Market Analysis: Map the market and its trends to identify attractive segments.
- Targets of screening: Identify and evaluate potential acquisition targets.
- Internal processes: Adapt internal working methods and processes to ensure an efficient and tailored acquisition process.
Establishment of acquisition strategy
Creating an acquisition strategy is central to determining which the type of business acquisition to be carried out; and how The acquisition contributes to the overall strategy. A well-formulated acquisition strategy creates a common understanding and direction, increasing the chances of successful acquisitions and long-term growth.
Dialogue and information gathering
The acquisition dialogue is usually initiated through contact with the acquisition object in order to establish a relationship with the company and its owners. During the dialogue, information is compiled for initial valuation and formulation of hypotheses on how the acquisition object will be operated and integrated after a possible acquisition.
- Meetings: Discussions about operations, strategy and future plans.
- Questionnaire: Detailed question list sent to the acquisition object to create a deeper insight into the company's financial and operational position.
- Memorandum of Information: If the target company has initiated a sales process with the help of advisers, there is often an information memorandum detailing the acquisition object.
- Historic achievement.
- The capital structure of the company.
- Budget, forecasts and estimated future free cash flows.
- Macroeconomic and industry-specific factors together with the level of risk in the specific company.
Company Valuation
Valuation is an important part of the acquisition process. There are different valuation methods that can be applied, with discounted cash flows (DCF valuation), multiple valuation and net asset valuation being the most common.
Establishment of a business case
A well-developed business case is crucial to ensure that all parties involved have a common understanding of the acquisition and its potential, increasing the chances of a successful integration and long-term growth. The business case should be continuously developed during the acquisition process to ensure that decisions are based on both a consistent and up-to-date analysis.
- The rational: Describe how the acquisition is strategically and financially motivated, as well as possible synergies.
- Market Analysis and Potential: Describe the market and growth opportunities and how it affects the target company.
- Valuation and valuation assumptions: Describe the valuation of the target company and the assumptions underlying the valuation.
- Investment needs: Estimate the investments required in connection with the acquisition.
- Risk analysis: Analyze potential risks and develop strategies to mitigate them.
- Description of the buyer company: Describe the buyer company and the rationale behind the acquisition.
- Valuation and commercial terms: Describe valuation and purchase price structure.
- Assumptions: Describe assumptions underlying valuation and commercial conditions.
- Future plans: Describe the future plans of the target company after an acquisition.
- The role of the seller: Clarify the role of the seller after the transaction is completed.
Indicative bid
Based on established business case and valuation, a written indicative bid is formulated to provide an initial formal indication of interest and valuation of the target company, as well as clarify the terms and assumptions of the deal. The indicative bid is non-binding and serves as a basis for further negotiations and due diligence.
Negotiation and Declaration of Intent
The indicative offer is followed by negotiation and letter of intent which implies an agreement between the buyer and seller on the basic terms of the deal before the formal due diligence process begins and the definitive agreements are drawn up.
This phase often involves discussions and compromises to ensure that both parties feel secure with the agreed terms. Once a letter of intent has been signed, the chances of a successful completion of the deal increase once the framework for the transaction has been set.
- Overarching conditions: Specify the main terms of the acquisition, including purchase price and purchase price structure.
- Due diligence: Specify the scope of the due diligence process.
- Exclusivity: Any agreement on exclusivity for the buyer for a certain period.
- Future role: Describe the role of the seller in the company after the acquisition.
- Timeframes: Establish time frames for the various steps until the completion of the transaction.
- Market and Commercial: Analyzes, among other things, the target company's market position, customer base and competitive landscape.
- Financial and tax: Includes a detailed analysis and review of the target company's financial history, cash flows, liabilities and assets, and tax.
- Legale: Includes, among other things, review of relevant agreements, licenses, IP rights, litigation and other legal obligations.
- Operational: Focuses, among other things, on the target company's operating processes, sales and marketing and production capacity.
- IT and tech: Inspects the target company's IT systems and technical infrastructure.
Due diligence
Due diligence is the buyer's review of the commercial, financial, legal and operational aspects of the target company. The goal is to identify risks and verify assumptions made.
Due diligence is usually carried out by external advisers with specialist expertise together with employees of the acquiring company.
Buy-price mechanisms
In the case of a business acquisition, there are different types of purchase price mechanisms. Typically, either of the principles are fixed purchase price (locked box) or preliminary purchase price with subsequent adjustment (completion accounts).
In the case of fixed purchase price, a fixed purchase price is paid on the date of access that is not retrospectively adjusted, while preliminary purchase price with subsequent adjustment requires an adjustment of the purchase price retrospectively based on an access statement.
- Preliminary purchase price: Paid on the date of access based on a preliminary access statement.
- Preparation of access accounts: Created after access and reviewed by buyers and sellers.
- Review and Approval: Both parties review and approve the final access accounts.
- Final settlement: Comparison and adjustment is made against the preliminary financial statements, which leads to the final settlement of the purchase price.
- Summary of key findings from due diligence and risks and opportunities identified.
- In-depth acquisition rational.
- In-depth analysis of the market and its potential.
- Financial analysis together with the identification of synergies and cost savings opportunities.
- Recommendation to management, board of directors and owners.
Basis for decision
Through an elaborate decision-making basis, management, board and owners can make an informed decision on the acquisition. This ensures that all aspects of the deal have been analysed and that there is a clear plan for how the acquisition will be successfully executed and integrated.
Signing and Access
After conducting due diligence, the final negotiation begins which is the phase in which previous negotiations and agreements are formalized, and the actual ownership of the target company is transferred from the seller to the buyer. This phase requires careful review of all documents and agreements in order for each party to have a clear understanding of the final terms.
- Final negotiations: Conclusion of negotiations to ensure agreement on all terms.
- Review of agreements: Full review of all relevant documents before signing.
- Signing of agreements: Formal signing that binds the parties to the transaction.
- Access (closing): Official transfer of ownership and signing of side agreements.
- Handling specific cases: Adaptations subject to regulatory approvals or other conditions.
- Contributors: Clarify changes and impacts internally.
- Customers and suppliers: Keep external stakeholders updated.
- Integration Overview: Describe how and why the target company is integrated.
- Roles and Responsibilities: Define expected roles and responsibilities.
- Risk management: Address potential risks and safety issues.
Communication in the event of a business acquisition
Ensuring that all stakeholders are informed and engaged is critical during and after a business acquisition. A well-structured communication plan reduces uncertainty, builds trust and prepares everyone involved for the changes to come. By developing and following a detailed communication strategy, in cooperation between buyers and sellers, the process can be managed smoothly and efficiently.
Integration after business acquisitions
After ownership passes from seller to buyer, the important integration phase begins, where the operations are integrated to maximize value creation and achieve the strategic objectives defined. Effective integration management and continuous follow-up are essential to ensure that integration objectives are met. It is important that the integration process is adapted to what is judged to be best in each unique situation, which can range from low degree of integration to full integration and fusion.
- Operational Integration: Integration of IT systems and databases for business continuity.
- Processes and procedures: Harmonization of work processes and procedures between the two companies.
- Financial integration: Merging of accounting systems and financial processes.
- Personnel strategy: Strategies for retaining key personnel and managing superannuation.
- Supplier agreement: Review and consolidate supplier agreements for cost savings and improved relationships.
