Our sell-side M&A solution
We have a strong network with large companies and investors in South Korea. You will raise the sales value of the asset that you want to sell through our strong network and make the deal done successfully.
Sell side M&A process
The sell side m&a process can consist of mainly four steps, although it would vary depending on the sale type.
Step 1: Planning a sale strategy
First, for successful asset sales, you should thoroughly build a sale strategy. That may include:
- Why are you selling your assets?
- Whom would you sell?
- How much would you want to sell?
- How would you sell it?
You need to define the reason for the sale first correctly. This is because one of the most important factors an investor considers in the acquisition is the seller’s reason for sale. You should clarify why you are selling your asset and confirm your willingness to deal with. If you tried selling it one or two times and then withdraw it later, your company might suffer a considerable loss both internally and externally.
If you decided to sell, you would need to define whom you would target and build a marketing strategy about what type of sales you would select among tender offer, selective disclosure, or private contact. Then, you have to decide whether to notify the fact that you are selling your company to the employees or proceed in secret.
You also need to estimate the range of deal value through valuation. Along with that, you should prepare for a CIM (Confidential Information Memorandum) to be distributed to potential investors. That is preparation for marketing. This step would take 4 to 8 weeks. This is the first step in the sell side m&a process.
Thorough preparation for the sale strategy determines marketing success.
Step 2: Sales marketing
The success of a deal depends on marketing. When the marketing is prepared well, you should find the right investor and sell your asset competitively high. In the case of a tender offer or a selective disclosure, you distribute the CIM to potential investors. And within the deadline, you receive an LOI and offer price from them, and you select a preferred bidder.
If you proceed with a private contact, you will give an investment teaser of limited information to each potential investor. Then, if you receive an NDA from any of them who express an interest, you will hand over the CIM. Sales marketing could take 4 to 8 weeks. This is the second step in the sell side m&a process.
The success of marketing lies in appealing with an attractive CIM to potential investors having the ability to buy.
Step 3: M&A due diligence
Due diligence can consist of two stages. One is CDD (Commercial Due Diligence), and the other is FDD (Financial Due Diligence). In order, after CDD, both parties enter an MOU, and then the potential investor proceeds with FDD. However, depending on the situation, CDD and FDD may move on simultaneously after signing an MOU.
CDD is due diligence for potential investors to see if the target company or asset fits their business or strategy. Usually, CDD proceeds after submitting an LOI when a potential investor reviews the CIM and wants to go further. They may request additional data while conducting the CDD.
FDD is an investor’s due diligence on the assets and liabilities of the target company after they internally make a decision to invest and signs an MOU with the seller. In general, an investor mobilises an accounting firm and a law firm to carry out the FDD, and the seller must actively respond to that.
During the time an investor is carrying out the FDD, internal employees of the target company get to know the facts of the sale of the company. Therefore, if the deal would stop in the middle of the process, it may result in significant losses internally and externally. FDD results may adjust the deal value mentioned in the MOU. M&A due diligence can take from 4 to 8 weeks. This is the third step in the sell side m&a process.
Step 4: Signing a contract after negotiation
After the final due diligence, the buyer and seller negotiate the final deal price. When the terms of the deal conclude, both parties report to the Board of Directors. After all of this goes well, the seller and the buyer get into a SPA (stock purchase agreement). And the buyer’s takeover work begins. This step can usually take 6 to 8 weeks as the last step in the sell side m&a process.
Factors for a successful company sale
You can evaluate whether the deal was successful through two bases. The first is whether you made the deal closed successfully. If the fact of the sale was known to the market but the deal was broken, the company might suffer internal and external damage. The second is how high you got premium. A high premium is possible when you appeal your asset well to potential buyers through strategic marketing and keep their interest to the end. There are three factors for a successful sale.
First, it is an elaborate strategy for a company sale. You should forecast the deal process and define a timeline and the work to be accomplished accordingly. Also, it is necessary to conduct business valuation supported by a logical basis and prepare a CIM that contains sufficient investment appeal. Then you need to make a list of potential investors who would be interested in the deal and also have resources. The more potential investors, the better the deal. That is a strategy to come up with Plan B. That could also increase the premium by inducing competition among investors. It is better to prepare a data-room that you can disclose in advance for the investors’ due diligence. That could expedite the sale process.
The second is marketing. Marketing in M&A is to reach out to as many potential investors as possible and appeal enough to them. The more potential candidates, the better your marketing. With only one or two buyers, their bargaining power would get strong, and you may not receive a high premium from them. You should also check if potential buyers have the will and resources to digest the transaction. If the selected potential buyer fails to raise financing for the deal, the target company will incur significant losses. For this, it is an excellent strategy to expand the range of potential investors not only domestically but also abroad.
The last factor is managing the deal schedule. The timeline you set in advance is likely actually to lengthen as the deal progresses. In particular, if the investor is not hurried in the internal decision-making or discovers some risks during due diligence that the seller did not inform in advance, it will take a much longer time than expected.
If it takes a longer time, it can lead the potential investor to think and give room to derail the deal process.
Therefore, the seller needs to lead the buyer’s schedule. Setting a timeline for each procedure and ensuring that the potential buyer adheres to that timeline is a crucial factor for the seller and its advisor.
A differentiated sell side advisory firm, JCinus
We can successfully sell the clients’ assets with three powerful strengths.
First, we are financial specialists who are proficient in company valuation and writing a CIM. It is vital to prove the value of the asset to investors. We can very well explain the value of our clients’ company by creating logical grounds. That is a fundamental determinant in increasing price bargaining power. We are also very good at the sell side M&A process so we can finish everything we should prepare before marketing. We will streamline the deal process by listing potential investors, preparing documents for due diligence, managing the seller’s TF team, and preparing negotiations with potential investors.
Second, we have global networking that no other advisor has. Our marketing reaches Korea and other Asian countries. Through continuous communication with the clients, we will update the list of potential investors and report their review status. Our global marketing will eventually increase the success rate and value of the deal.
Finally, we have experienced many types of deals across different industries. We understand the environment of our client’ company and the deal structure so that we can provide a fitted sale strategy accordingly. All of these strengths we hold will eventually lead to a successful sale of your business or asset.
Please leave your inquiry about our sell side m&a process, and we will contact you after checking it.