What does an acquisition mean? process look like?
There are two types of acquisition processes: planned and opportunistic. In a planned process, a company looks for a suitable buyer for its business, while an opportunistic process is started by a buyer.
In either case, the process begins with building a strong list of potential buyers, as detailed in Part 1 of this series. Then it’s a sprint with those potential buyers that (hopefully) results in Letters of Intent.
From there, it’s time for due diligence, which can take several weeks. With a bit of luck and a lot of hard work, the deal will be closed and you will go to the integration after the acquisition.
The shop print
Even if the sale price isn’t going to break records, this is an opportunity to create a successful outcome that maximizes your long-term impact.
In an opportunistic process, an acquirer approaches a company it wants to buy.
If you’ve been approached and decide to pursue an acquisition, you’ll have a short window of time to continue that conversation and reach out to other companies on your list of potential buyers.
In your initial conversations with the active buyer, you can expect to find out how much they plan to bid, as well as set up a framework for the process.
In a planned process you have control over the timing, but you have to think about a triggering event in your company that creates some time pressure.
In opportunistic processes, the triggering event is accessed by an active buyer. For venture capital backed companies in a planned process, the triggering event is often a funding round. You may become interesting to the companies on your list if they think they can acquire you at the current valuation rather than at a higher valuation after you raise another round.
Then it gets hectic.
The road to a LOI
However the process started, you, your board and advisors have a few weeks to negotiate with all interested parties. As a founder, you contact potential buyers yourself or ask board members to do this on your behalf.