|
This sophisticated approach typically yields multiple equity
offers to be valued not only in terms of the equity for cash ratio,
but also for the intangible contributions made by the equity partner
(investment group or strategic partner/synergistic company). These intangible
contributions can far outweigh the capital contribution, and can include;
management expertise, relationships, distribution channels, reduced
overhead, intellectual property, transfer of knowledge, additional sources
of capital at a lower cost, etc.
Following is a typical overview outlining the process we undertake during
an outside equity raise scenario:
Phase I - Preparation
| 1. |
Obtain Company financials and other information
and commence work on valuation of company, if required.
|
| 2. |
Complete and deliver company valuation (where
required).
|
| 3. |
Develop a financial model (including pro-formas,
recast earnings, projections, etc.) to be used with prospective
investors.
|
| 4. |
Prepare a blind profile describing Company
to prospective investors.
|
| 5. |
Prepare a confidential memorandum(s) describing
the Company to be shown to prospective investors.
|
| 6. |
Identify and prioritize, in consultation with
the management, specifically named potential investors.
|
| 7. |
Identify, by industry and region, numerous
general potential investors (by SIC codes) for the Company.
|
Phase II - Marketing
| 1. |
Post blind profiles of the Company on websites
subscribed to by Spectrum.
|
| 2. |
Initiate implementation of marketing campaign
by contacting 5,700+ Buyout Groups (Private Equity Groups and
Private Investment Groups) in Spectrum’s proprietary database
regarding the Company offering.
|
| 3. |
Obtain signed non-disclosure/confidentiality
agreements from prospective investors and provide confidential
memorandum on Company.
|
| 4. |
Commence solicitation of specifically named
potential investors for the Company.
|
| 5. |
Obtain signed non-disclosure/confidentiality
agreements from prospective investors and provide confidential
memorandum on Company.
|
| 6. |
Research and obtain contact information of
general potential investors for the Company.
|
| 7. |
Commence solicitation of general potential
investors for the Company.
|
| 8. |
Obtain signed non-disclosure/confidentiality
agreements from general prospective investors.
|
| 9. |
Provide interested general prospective investors
with a qualifying investor profile.
|
| 10. |
Review qualifying investor profiles from general
prospective investors.
|
| 11. |
Provide confidential memorandum on Company
to qualified general prospective investors.
|
Phase III - Negotiation
| 1. |
Solicit, as appropriate, preliminary indications
of terms from potential investors and assist Company management
in determining which potential investors should continue as part
of the sale process
|
| 2. |
Assist appropriate suitors in preparing letter
of intent or offer to purchase equity.
|
| 3. |
Assist Company management in negotiating letters
of intent with the prospects having the best combination of price,
terms, and ability/motivation to close.
|
| 4. |
If structured as an asset transaction, initiate
review of tax liability on gain and a simultaneous stock sale
to financial partner to eliminate or reduce tax on sale of assets.
|
| 5. |
If the proposed transaction is a stock purchase
assist in bridging the contingent liability gap through representation
and warranty insurance solutions.
|
| 6. |
Finalize and obtain signatures on offer to
purchase.
|
Phase IV - Final Documentation &
Closing
| 1. |
Assist management in communications with the “best” prospect
in the final due diligence process.
|
| 2. |
Assist management and its legal counsel to
negotiate the final terms of purchase agreement and effect a closing.
|
| 3. |
If appropriate, close third party stock sale
of Company’s stock to eliminate or reduce tax prior to
dispersing business proceeds of investment to owners.
|
|
