How We Can Help Negotiate and Close the Deal With Your Acquirer
Negotiating with your buyer can quickly deteriorate without significant experience in M&A. An experienced corporate development executive has the upper-hand against a small business CEO and can quickly move the deal in their favor. If you don't have an experienced M&A professional (not your attorney or CPA), you will be leaving money on the table and reducing the chance of your deal closing. For companies being pursued by a buyer, our most common engagements end up as follows:
- We typically start with performing a valuation to reach a target price.
- We then usually discuss and negotiate the transaction with the buyer. This helps us understand their intentions, guide them through the information, and work with them to develop a price and terms for the transaction.
- If we cannot obtain the valuation necessary from the buyer, it may be necessary to run a limited (5-10 buyers) or full (50-100 buyers) auction process.
Even if you have a letter of intent you are satisfied with, you will quickly find that:
- You will be overwhelmed with many (possibly useless) due diligence requests
- You will inadvertantly provide the buyer with information you didn't intend to give
- The buyer will try to renegotiate with you after due diligence
- You may have a difficult time communicating with the buyer and attorneys
Let us help you walk you through the process to help ensure you successfully close.
One of our strengths is moving quickly. Once we are engaged, we perform preliminary analysis and develop a strategy with you within a couple of days (or within 24 hours if necessary) after which we turn to speaking with the buyer. If the buyer is motivated and the seller can provide information in a timely manner, we can obtain a letter of intent or at least a proposal of the deal structure within one to two weeks. From there, we try to push close to 60-90 days from the execution of the letter of intent. If we cannot get a deal from the buyer that meets your objectives, we usually suggest moving to a competitive bidding process.
Orion's fee structure includes an engagement fee and a success fee.
The engagement fee is a non-contingent amount that we require to ensure you are committed to us, our process and are serious about acting on reasonable offers. Any firm that does not charge an upfront engagement fee either does not have the correct licensing requirements (which can create substantial liability for you), will not put forth significant efforts in the engagement, or is trying to build their reputation and expertise at your expense.
In addition, since this is a commitment fee, we credit any engagement fee towards the success fee. We regularly spend in excess of one thousand hours closing a deal and unlike other "engagement fee mills," most of our income comes from closing successful deals and not by charging engagement fees.
The success fee is a graduated percentage that we receive upon a successful close. Even if there is an earnout or contingent payment, we only get paid when you get paid, keeping our interests completely aligned. Success fee percentages vary from engagement to engagement and are based upon the deal size, type of engagement and other factors. Beyond our ability to get the deal closed, the incremental amount our clients receive from the sale of their company using our services is typically greater than our success fee.
Every client has different needs and objectives and we tailor a plan that best meets your needs, budget and risk appetite. Contact us and we can discuss a game plan and engagement that works for you.