M&A Insights: January 2022

THE M&A SELL-SIDE

PROCESS EXPLAINED

Charter Capital Partners • 140 Monroe Center NW • Suite 300 • Grand Rapids, MI 49503 • 616.235.3555
chartercapitalpartners.com
THE M&A SELL-SIDE
PROCESS EXPLAINED
Introduction
As a business owner, arriving at the determination that it’s time to sell the business is an incredible milestone for the
shareholders, its management team, employees, and brand. The process of selling a business is extremely complex and
can be very time-consuming for the management team. In many cases, depending on the seller’s timeline, the management
team may seek the help of advisors to facilitate the sale of the company. By bringing in experts to help facilitate the transaction
you are helping ensure that all of the shareholders objectives can be met. In today’s M&A market, well-performing
businesses are in high demand as the availability of capital has set new records and the continued importance to
drive top and bottom-line growth remains a key objective amongst investors. Considering this activity, it is critical
for any business considering a sale to be well prepared and to understand what to expect throughout the process.

When is the preferred time to engage in a sell-side process? This is arguably one of the most crucial questions a
management team encounters and can be one of the most complex to answer. Oftentimes, the decision to sell a
business has been well thought out by its owners only after addressing characteristics crucial to its operations. Factors to
consider include company specific variables, the macroeconomic environment, and the shareholders’ objectives of a sale.

Because the sell-side process can be so intricate, selecting a suitable investment banker is vital in alleviating the inevitable
disruptions that can occur during the process. The investment bank will staff the transaction with trained professionals
who have significant experience advising businesses on the sell-side, buy-side, and capital raise transactions. Hiring
an investment banking advisor helps ensure that all the owner’s objectives are achieved and allows management to
continue operating the business in its standard course. In most cases, the investment bank will provide its client with an
upfront comprehensive financial analysis/business valuation, an overview of current market dynamics, precedent transaction
comparables, and strategic alternatives prior to marketing the business. This provides the sellers with an expectation
of how the market may perceive the business.

At Charter Capital Partners, it is our mission is to provide our clients with comprehensive investment banking advisory
solutions. In this whitepaper, travel with us as we take a deep dive into the intricacies of the sell-side M&A process. We will
provide you with a straightforward explanation of the sell-side process, an overview of the technical vocabulary used, and
discuss ways to mitigate risk. Our goal is that this whitepaper helps to reduce any uncertainty around the M&A process
and to provide you with a framework as you embark on your own M&A journey.

Phase #1: Market Preparation (Months 1-2)

Starting and scaling a business is a difficult job. However, exiting the business can be even more challenging. Engaging
the right investment bank can help streamline many of the difficulties brought on during the sell-side process. Following
the shareholders' decision to engage an investment banking advisor, a detailed process plan is developed in connection
with management that expressly outlines the transaction timeline. Exhibit 1.1 on the next page outlines a standard sell-
side process timeline and each phase’s objective. Accordingly, it’s the sell-side advisor’s goal to deliver its client speed
and certainty of close, maximum value for the business, and other transaction specific considerations the seller outlines.
Understanding the seller’s objectives is crucial and allows the advisor to develop a custom, tailored process for its client.

Sell-Side Advisor Preliminary Due Diligence

To develop a custom process for the shareholders, the deal team and client schedule and execute a kickoff meeting to
discuss and prioritize shareholder objectives and craft an appropriate sale process. The kick-off meeting is an all-day
business discussion which enables the advisors to understand the business operations on a very detailed level.

M&A Insights: January 2022 Page 2

This is a Q&A style meeting which allows for the deal team to ask questions ranging from general operations to financial
and legal in an attempt to cover all its bases, with questions such as what is the company’s unique value proposition?
Who are the key customers? Key vendors?

Much of this information and the subsequent supporting data requests that are discussed will be utilized to develop
robust marketing materials for the business including the teaser, confidential information memorandum (CIM), and
management presentation (MP). The data provided from the client during this phase is also compiled, reviewed, and filed
away into an online-secure, virtual data room (VDR) which will be made available to interested buyers later in the process.
This preliminary due diligence phase is an opportunity for the deal team to determine the best way to approach the
marketplace by selecting either a targeted or broad marketing strategy.

Exhibit 1.1: M&A Process Timeline

1. Market 2. Initial Buyer 3. Management 4. Due Diligence

Preparation Marketing Presentations and Closing

• Coordinate quality of • Hold diligence calls • Facilitate buyer • Receive and evaluate
earnings (QoE) report with buyers diligence and data letters of intent
• Develop limited • Prepare management room access • Negotiate with lead
buyers list and teaser presentation • Respond to diligence parties
• Complete teaser and • Organize secure online inquiries with buyers • Facilitate confirmatory
Important confidential data room • Select top buyer due diligence
Deal Tasks information • Receive and evaluate groups to attend • Prepare definitive
memorandum (CIM) initial bids (indications management agreement
of interest) presentations
• Finalize
• Coordinate • Prepare management documentation
management team for buyer
presentations • CLOSE TRANSACTION
presentations

Timeline Month 1-2 Month 2-3 Month 3-4 Months 5-7

Key Begin outreach to Receive IOIs and Sign LOI

Milestones potential buyers select top buyers with one buyer
for next steps

Dark Blue = High Management Involvement

Marketing Process Strategies

The process of selling a business is similar to a general auction. However, in the M&A industry a sell-side auction is
brokered by an investment bank who guides the buyer or bidder through a staged process, providing them informa-
tion throughout. The investment banking deal team identifies multiple prospective buyers who are interested in acquir-
ing businesses operating in a certain industry. Auctions provide shareholders comfort that the broader market has been
cleared and helps establish a market value for the business. This type of strategy helps ensure that all buyers interested in
the acquisition put their best foot forward in terms of price and structure and ensures the speed and certainty to close.

A well curated auction is designed to be beneficial for both the sellers and acquiror, which requires both parties to de-
vote significant time and resources. The deal team will prepare detailed marketing materials, identify any blemishes on the
business, prepare management for Q&A and management meetings, and develop a list of potential buyers to which the
business should be marketed. Once the process has commenced, the deal team is responsible for the day-to-day execution
of the transaction. It is the deal team’s responsibility to alleviate as much burden from management as possible during
the process so they can focus on running the business.

M&A Insights: January 2022 Page 3

There are two primary types of marketing strategies investment banks utilize, a targeted auction and a broad auction.

• Targeted Marketing Process Strategy: Also known as fireside chats, this process brings only the most qualified buyers
to the table, targeting a select number of highly active, interested buyers with extensive industry knowledge.

• Broad Marketing Process Strategy: Broad go to market strategies are the most common type of sell-side process,
targeting a wider number of buyers with industry experience to ensure a market-clearing effort, generally deriving
the highest possible enterprise valuation driven by market competition.

A comparison of the key considerations for Exhibit 1.2: Key Process Considerations
each strategy are provided in Exhibit 1.2. Key Process Targeted Marketing Broad Marketing
Considerations Process Strategy Process Strategy

Both strategies offer sellers the ability to Number of

Potential Buyers 5 -50 50- 200
customize their process based on their Management
Presentations 2- 3 3-5
objectives. For example, if maximizing
value is priority number one, then a
Timeline <5 months 5-7 months

broader, more competitive strategy should Confidentiality + Higher likelihood of

preserving confidentiality - Limited confidentiality

be utilized. On the contrary, if the number Business

Disruption + Expedited timeline to close for
limited business disruption - Time consuming and disruptive
to the organization
one priority is a quick and efficient process,
then a more targeted strategy can be
Negotiating
Leverage - Reduced competition means
less negotiating leverage + Strong negotiating leverage

utilized. Each strategy brings unique Transaction

Proceeds - Increased potential to “leave
money on the table” + A market-clearing effort
maximizes purchase price
benefits to the shareholders and which route
+
-
Higher probability to close
Certainty to Less certainty of close with
to choose depends on the seller’s objectives. Close fewer potential buyers
- Unsuccessful transaction creates
perception of undesirable asset
Develop Buyer Universe Partnership + Increased focus on a true
partnership + Less focus on partnership and
higher focus on proceeds
The development of a robust buyer
universe is a key part of the sell-side process and can be the difference between a successful and unsuccessful transaction.
The deal team has the experience, knowledge, and relationships with prospective buyers, ensuring they bring the most qualified
and reputable buyers through the process. The deal team will develop, vet, and effectively market the business to the selected
buyer universe. Buyer universes are developed by leveraging several tools employed by the investment bank, including S&P
CapIQ, Pitchbook, Bloomberg, and FactSet, each of which provide profiles and a myriad of characteristics on each type of
buyer/company. Key data points the deal team reviews and analyzes when vetting buyers include the prospective buyer’s
investment criteria, industry focus/expertise, fund size, fund lifecycle, portfolio track record, and market reputation. In many
cases investment banks are in communication with prospective buyers daily across other deals in their organization.

A strong buyers list will contain three types of buyers: strategic, strategic financial, and financial.

• Strategic Buyers: Businesses that are operationally similar to the selling company and are
looking to create a synergy within their existing businesses.

• Strategic Financial Buyers: Private equity firms that are currently invested in or have previously
invested in businesses similar to the selling company.

• Financial Buyers: Private equity firms that are interested in investing in businesses of similar
size and industry to the selling company.

Each type of buyer brings a unique value proposition to the shareholders. For example, strategic buyers can generally
offer shareholders the highest price due to operational synergies, but often move much slower than their counterparts.
Financial buyers tend to offer shareholders the fastest timeline to close and immediate access to growth capital to fund
growth strategies. Nonetheless, the prevailing factor amongst winning buyers is generally not the one with the highest
purchase price, but rather the one who aligns most with the seller’s values and business culture.

M&A Insights: January 2022 Page 4

Develop Marketing Materials Exhibit 1.3: Example Teaser
The development of marketing materials is an imperative Acquisition Opportunity

part of the sell-side process, as all of the preliminary due Project Name
Description of the company, industry, and market

diligence, discussions with management, and the analysis of Company Overview

data is brought to life in story form. Marketing materials serve

 Bullet points and images detailing the company, its clients, history,
growth opportunities, industry demand, plans for the
ownership/management team post-transaction, and other information

as a spark to ignite buyer interest in the business and in

that may be relevant to potential buyers.
 Bullet points and images detailing the company, its clients, history,
growth opportunities, industry demand, plans for the

generating a favorable first impression. It is the deal team’s

ownership/management team post-transaction, and other information
that may be relevant to potential buyers.
 Bullet points and images detailing the company, its clients, history,

responsibility to develop materials that accurately portray the

growth opportunities, industry demand, plans for the
ownership/management team post-transaction, and other information
that may be relevant to potential buyers.

business and position its investment highlights. There are two  Bullet points and images detailing the company, its clients, history,
growth opportunities, industry demand, plans for the
ownership/management team post-transaction, and other information

key documents the investment bank is responsible for creating,

that may be relevant to potential buyers.
 Bullet points and images detailing the company, its clients, history,
growth opportunities, industry demand, plans for the

the teaser and the confidential information memorandum or ownership/management team post-transaction, and other information
that may be relevant to potential buyers.

CIM. The deal team takes the lead in developing these materials Select Investment Highlights Financial Summary ($ in millions)

but approaches this phase as a collaborative process with

$50.0

Strong Value Proposition: Description of the value

Revenue Adj. EBITDA $45.0

proposition. $40.0

management and other advisors involved, such as accountants

$81.0 $35.0

Niche Leader in Industry: Overview of company’s $30.0

industry position.
$27.7

or legal counsel.
$53.0
$25.0

$47.7
$43.0
$20.0

Identified and Actionable Growth: Opportunities $15.0

to increase the value of the company. $14.5

$7.7
$10.0

$8.6 $9.1

Teaser
$5.0

Dedicated, Experienced Management Team:

$-
$2.6 -

Plans for management team post-transaction. 2019 2020 TTM 2021P 2022P
5/31/2021

The teaser is the first formal document presented to prospective All communications, inquiries, and requests should be addressed to the deal team members listed:
Deal Team Member Name Deal Team Member Name Deal Team Member Name

buyers in the sell-side process. A teaser is a one-to-two-page

Title Title Title
email address email address email address
phone phone phone

confidential or blinded document designed to provide buyers

chartercapitalpartners.com

an overview of the business, its investment highlights, and historical/projected financial performance. The teaser informs
buyers that the business has engaged an investment banking firm to run a formal, sell-side process. Exhibit 1.3 provides an
example teaser that might be shared with prospective buyers.

Confidential Information Memorandum

The CIM serves as the primary marketing document in the sell-side process. This document is extensive and can often-
times be 50+ pages, providing prospective buyers with immense detail on all aspects of the business. The outline below is
an example of the types of sections that may be included in a CIM.

• Section 1: Executive Summary

• Section 2: Company Overview
• Section 3: Products and Services
• Section 4: Industry Overview
• Section 5: Growth Opportunities
• Section 6: Financial Overview
• Section 7: Key Investment Considerations

The CIM, like the teaser, can be formatted in a number of ways and include various sections depending on the type of business
and information selected to be provided. In most cases, the CIM will contain an executive summary, transaction overview,
products and services, customers and suppliers, operations, facilities, management team, customer case studies, competitors,
growth strategies including acquisition candidates, and historical and projected financial performance. The financial section is
a key piece of the CIM and is designed to provide buyers with a framework to develop a detailed valuation when formulating
an acquisition bid. The deal team, in collaboration with the shareholders, spends significant time and resources developing a
thorough report ensuring all aspects of the business are highlighted. This document goes through many iterations before its
final version, which must be approved by shareholders, the company’s legal team, and regulators prior to distribution to buyers.

M&A Insights: January 2022 Page 5

Confidentiality Agreement
The confidentiality agreement (CA) is a mutual, legally binding agreement between the business and prospective buyer which
protects both sides when sharing confidential information. The shareholders’ legal counsel takes the lead on drafting a CA.
This document is generally off the shelf ready. The CA, which is distributed alongside the teaser to buyers, must be executed
prior to receiving the CIM. In many cases, the recipient will have comments resulting in some back and forth redlines prior to
execution.

Phase #2: Initial Buyer Marketing (Months 2-3)

Following the completion of all pre-marketing materials the business is ready to enter the marketplace. The deal team is
responsible for bringing as many buyers through the sell-side process as possible while ensuring all parties move through
at a similar pace.

Contact Buyers and Distribute CIMs

The first outreach begins with the deal team contacting prospective buyers by distributing a mass email distribution
containing the CA, teaser, and summary of the opportunity in the body of the email. This marks the formal launch of the
process and is referred to as being "in-market." Upon the buyer’s receipt of the email, assuming there is interest, the buyer
will return an executed copy of the CA to receive the CIM. In the event some buyers don’t respond, a senior member of
the deal team will follow up with a phone call to discuss the opportunity. This process takes several weeks to complete
as buyers move through internal cadences. Many times, after revewing the CIM, interested buyers will request a call with
the deal team to gain a better understanding of the business. This is an opportunity for buyers to separate themselves from
others in the process and address questions to aid in their analysis and understanding of the transaction dynamics. Depending
on the competitiveness of the process the deal team may elect to provide buyers with high-level valuation guidance in an
effort to vet out inadequate buyers.

Throughout the process, junior deal team members keep detailed records of all buyer interactions, including emails and
calls, which buyers have responded, and which buyers have passed. During this phase of the process, the deal team has
a standing call with the shareholders to
Exhibit 2.1: Sell-Side Process Update
provide an update on the status of each
buyer. Exhibit 2.1 is an example of a process
update which is shared with the sharehold- Process Overview
ers. Process Notes:
• Launched Marketing Process: Date
• First Follow Up: Date
Indication of Interest Process Letter • Next Scheduled Follow Up: Date

Prospective buyers are given several weeks

• IOI Bid Date: Date

to review the CIM and schedule calls with the Initial Contact Made Response Rate CIMs Distributed Pass

Previous Update (Date) 200 45% 70 20

deal team prior to submitting their initial non- Previous Update (Date) 240 50% 90 30

binding bid. During that time, the deal team, Previous Update (Date) 260 70% 100 45

in connection with the shareholders legal Current (Date) 280 80% 120 50

counsel develop a non-binding indication of Buyer Stage Buyer Type

interest (IOI) process letter. This document is Passed

Reviewing CIM
Strategic
50 Financial Financial

distributed to all prospective buyers shortly 50 50 50

after the CIM and provides buyers with details

regarding the level of information the deal
Sent Teaser and Followed Up Strategic
50 50

team will be looking for to appropriately

analyze bids.
Confidential Project Name | 1

M&A Insights: January 2022 Page 6

IOI process letters generally include the following items.

• Due Date: Date and time at which the IOI is due. • Required Approval: A brief discussion of the level of
review the IOI will receive within the company and any
• Purchase Price: Preliminary total enterprise value for
approvals required for buyer to close the transaction.
the business on a cash-free, debt-free basis presented
as a range (minimum and maximum valuation). • Due Diligence Request List: A request list of any ad-
ditional information the buyer will require in order to
• Assumptions: All material assumptions utilized to
submit a formal LOI.
arrive at the total enterprise value.

• Financing: Identity of the buying entity, the sources • Timeline: A proposed timeline for completing the

from which buyer would finance the transaction, and transaction.

any existing financial and capitalization information

• Post-Transaction Strategy: A description of the buyer’s
for the buying entity.
plans for the post-transaction operating structure of
• Strategic Synergies: A description of the strategic fit, the business, including plans for the management
if any, between the buyer and the selling company. team and other employees of the business.

The IOI bids are compiled and analyzed by the deal team, taking into consideration several characteristics including total
enterprise value, structure, timeline to close, and any strategic synergies an acquirer may have. Exhibit 2.2 provides a glimpse
at an IOI valuation analysis used to compare initial offers. Total enterprise value is not the sole driver in vetting potential buyers.
Rather, the deal team will take into
Exhibit 2.2: IOI Comparison Analysis
consideration the buyer's work on Bid ($M) Enterprise Value in $M
the deal to date. Once all the IOIs # Buyer Low Single High $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 $65

have been received, the deal team 1. Buyer #1 $50.0 - $60.0

2. Buyer #2 $45.0 - $55.0
schedules follow-up calls with a 3. Buyer #3 $40.0 - $50.0
4. Buyer #4 $35.0 $45.0
select number of the top bidders to 5. Buyer #5 $30.0 - $35.0
understand the depth, detail, and 6. Buyer #6 $30.0 - $35.0
7. Buyer #7 $30.0 - $35.0
validity of the IOI submitted. After 8. Buyer #8 $20.0 - $25.0
9. Buyer #9 $10.0 - $20.0
all calls are complete and informa- 10. Buyer #10 $10.0 - $15.0
tion compiled on each offer, the deal
Valuation
team prepares a brief presentation Enterprise Value in $M $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 $65
for the shareholders outlining and
EBITDA Multiple
recommending which buyers to 2021A 5.00x 5.25x 5.50x 5.75x 6.00x 6.25x 6.50x 6.75x 7.00x 7.25x 7.50x
invite to the second round, to
IOI Range
meet the management team and
see the facilities.

Phase #3: Management Presentations (Months 3-4)

Phase #3 of the sell-side process is a critical junction, with a number of interested buyers continuing to analyze the business
in an effort to submit a strong final bid by the LOI due date. Depending on the type of buyer, whether it’s a strategic
or financial buyer, each may have a certain level of understanding with the business and will require differing levels of due
diligence to vet the business.

M&A Insights: January 2022 Page 7

This stage of the process is time consuming and can take several weeks to complete depending on the depth of the due
diligence conducted and the locations of the management presentation and facility tours. The deal team continues to
play a central role in the process as they spearhead much of the information flow, coordinate management presentations,
schedule facility visits, and finalize the build-out of the virtual data room.

The attractiveness of the business will determine how many IOIs are received and how many buyers can be brought
through to meet the shareholders. If a buyer is selected to move forward in the process, they are afforded a significant
amount of time with the shareholders and management team. Making this connection between management teams
is an essential part of the sell-side process. While groups move through this phase at similar paces, buyers behind the
scenes are continuing to review new information in the VDR and continue to conduct additional financial and industry
due diligence. In some cases, the buyer may reach out to their network to further vet the industry and business. The
number of buyers brought through to meet the shareholders varies in every process but it is generally expected that
the shareholders can meet 5-10 buyers. Inviting more than one group to meet the shareholders allows the deal team
to maintain a competitive environment and keep the process moving at an efficient pace in correlation with the initial
transaction timeline.

Management Presentations/Facility Tours

Management presentaions mark the formal start of the second round in the sell-side process. The format of management
presentations can vary, but generally include a day-long business session for the sellers and buyers. Key attendees
at the management presentation include the seller’s CEO, CFO, COO, and key division heads. In most cases, management
presentations are kicked off with a less formal dinner the night before the meeting takes place, which allows both sides
to meet on a personal level prior to discussing business the next morning. The day-long presentation is a more formal
discussion guided by a deck that includes many of the same sections that are included in the CIM but annotated by
management, outlining the founding and history of the business, its unique value proposition, an overview of key team
members, its operations, detailed financials, and growth strategy. The most productive management meetings are
interactive and conversational in nature with Q&A throughout, versus a pure presentation by the selling management
team. However, it is important that the management team is in alignment with who speaks to which slides, indicating
to the buyer that the team is organized, professional, and detail oriented.

Facility tours are a key component of the prospective buyer’s preliminary due diligence, which provide a first-hand view
into the company’s operations. The tour can occur at any stage of the management presentation process in an effort
to retain confidentiality and continuity with its employees. A typical facility tour involves a guided tour by one of the
key managers involved in the process who walks the prospective buyer through its offices, warehouse, manufacturing
plants, and distribution centers. Similar to the management presentation, the facility tours are meant to be interactive,
enabling both the seller and buyer to ask questions about and compare to one another’s operations.

Virtual Data Room Access

As buyers move through management presentations they are concurrently granted virtual data room (VDR) access. A
virtual data room is an online, secure file structure that contains all the company’s data. A typical VDR file will be struc-
tured in categories similar to the CIM outline, including key folders such as corporate documents, financial, operations,
human resources, insurance (health/business), real estate/environmental, and legal. Companies such as Merrill DataSite,
Intralinks, and Firmex specialize in sell-side/buy-side VDRs. Each of these sites allow the deal team to customize site
settings to specify which buyers have downloading capabilities, to redact sensitive information if a strategic buyer is
involved, and even to analyze which files have been accessed most. Costs associated with each VDR provider vary
depending on the size of the deal and sophistication of the business information available.

M&A Insights: January 2022 Page 8

Buyers who are serious about acquiring the business will dedicate significant resources to perform a thorough review of
the information available in the VDR. In almost all instances, buyers will engage third-party accounting firms, attorneys,
and consultants to review company data to understand potential synergies, opportunities, and most importantly any
risks that are involved in the transaction. While third party consultants review the information there may be several
Q&A sessions back and forth as the buyer and consultants digest the data. The deal team must be very diligent at
this point in the process, as they work to provide buyers with timely responses to their questions and continue moving
others through management presentations. The goal is to ensure that all groups have a sufficient amount of time to
analyze as they head into the final phase of the sell-side process.

Letter of Intent Process Letter

Distributing the letter of intent (LOI) process letter marks the second round of bidding for buyers still involved in the
process. This can be viewed as a second opportunity for buyers to truly put their best foot forward. The LOI process
letter is similar in structure to the IOI process letter and provides buyers an outline of what is expected to be included
in their final offer. The LOI process letter is much more stringent compared to the IOI document and should be followed
closely by buyers. LOIs submitted by the buyers are reviewed in grave detail in connection with legal and generally
include the following:

• Due Date: Date and time at which the LOI is due.

• Consideration: Exact total enterprise value for the business, on a debt-free and cash-free basis,
which should include all material assumptions upon which the valuation is based.

• Working Capital: Confirmation of the target amount of working capital for the business.

• Sources and Uses of Capital: Identification of the buying entity and the sources from which the
buyer would finance the transaction.

• Due Diligence: Identification of each of the buyer’s due diligence work streams and to what degree
each of those work streams have been completed and which streams will be a priority to close.

• Timing and Certainty to Close: Timing and certainty to close are both critical factors in evaluating offers.

• Management: An overview of the buyer’s plans for the post-transaction operations of the business,
including plans for the management team and other key employees, specifying the following items in detail:

• Compensation and Benefits Plan: Salary, bonus, and/or benefits plans for management.

• Employment Arrangements: Detail around which members of the company’s management team,
if any, would be required to enter into employment agreements.

• Management Incentive Programs: Details regarding management bonus, phantom equity, deferred
compensation, and/or equity incentive programs and timing of when such plan details will be determined.

Receive Final Letters of Intent

Receiving LOIs is a milestone for both the sellers and investment banking deal team. These LOIs signify that the business
has tangible value in the marketplace. The LOIs submitted by buyers are expected to be in near final form with the excep-
tion of confirmatory due diligence and the securing of any financing needed to fund the transaction. The deal team will
work with the buyers to finalize their bids and provide any additional information needed to firm up the offer.

M&A Insights: January 2022 Page 9

Phase #4: Due Diligence and Closing (Months 4-7)
Evaluate Final Bids and Select Final Buyer
Following the receipt of LOIs from all interested buyers, the deal team, along with the seller’s legal counsel, will perform
a detailed review of each letter to analyze the purchase price, deal structure, and the likelihood of a successful closed
transaction. These LOIs are compared to the buyer’s initial IOI bid, assuming they submitted, to determine and evaluate
any changes between the two letters.
The number of LOIs a process receives varies greatly by the market's reception of the business. In most cases the deal
team would advise the seller to negotiate two or more LOIs depending on how many are received. These are very delicate
negotiations that take place between senior members of the deal team and senior members from the buying team.
Negotiating tactics vary but are always founded based on the seller’s objectives for the transaction. Negotiation factors
typically include purchase price, transaction structure, and timeline to completion. Ultimately, having two buyers negotiating
their LOIs increases competition. The goal here is to have one of the two buyers differentiate themselves from the other,
most often times through an increase in overall purchase price.
After negotiations take place, the deal team, along with the seller’s legal counsel, recommend a final buyer to the seller.
Once the seller and buyer execute the LOI, they retain exclusivity for an agreed upon period of time, which is generally in
the neighborhood of 30-90 days. During this period the buyer works to finalize remaining open due diligence streams,
obtain the necessary financing for the transaction, and turn a copy of the definitive purchase agreement. Negotiating
and executing the purchase agreement is the final step in the sell-side process.
Closing Day
A simultaneous sign and close is the goal of any successful transaction and although it seems routine there are a number
of moving parts that need to be checked and finalized. It is essential that the seller has a strong attorney with significant
M&A experience as they spearhead much of the process on the back end, such as the definitive purchase agreement
negotiations. Organization is a key driver in getting to a simultaneous sign and close, but to do so, legal counsel must
have the following items completed:
• Final purchase agreement and supporting schedules
• Final employment agreements (if required)
• Final lease agreements (if required)
• Ensure seller consents to all the documents
• Compilation of all signature pages
• Confirmation of all wiring account information
After receiving all the necessary consents and signature pages of the selling party and buying party, the legal teams will
schedule an all hands call to release the signature pages upon confirmation of satisfactory due diligence. Participants
include both legal teams, the sellers, buyers, and investment bankers. Upon receipt of the signature pages the buyer will
contact the bank and release the wires. Confirmation of the wires hitting individual and advisors accounts signifies the
close of the transaction!
Conclusion
As a seller, navigating the sell-side process can be a strenuous endeavor. Often the most difficult part is taking the first step.
Surrounding yourself with a diverse and experienced team of expert advisors will ensure a process that is executed with the
utmost integrity and professionalism. The end result is a transaction that fulfills the goals and expectations of all parties involved.

References
Investment Banking Second Edition, Rosenbaum & Pearl Corporate Finance Institute: Role of the Investment Banker in Sell-Side M&A
Wall Street Prep M&A Industry Guide: Sell-Side Process Deloitte: Sell-Side Strategies for Private Companies, 2014 edition
Thomson Reuters Practical Law: Signing & Closing M&A Transactions Toolkit
M&A Insights: January 2022 Page 10
About Charter
Founded in 1989, Charter Capital Partners is a premier investment banking Charter Advisory Team
firm headquartered in Grand Rapids, Michigan. We offer a comprehensive John Kerschen
range of investment banking advisory services, including buy-side and President and Managing Partner
jkerschen@chartercapitalpartners.com
sell-side M&A, succession planning, business valuation and capital raise.
Mike Brown
Charter was named one of the top 100 most referred middle-market Partner and Managing Director
mbrown@chartercapitalpartners.com
advisory firms in the US, according to a survey of 1,000 private equity firms,
strategic acquirers, and family offices compiled by Axial, a network of middle Hector Bultynck
Managing Director
market investors, advisors, and CEOs. Our mission is to deliver superior hbultynck@chartercapitalpartners.com
professional guidance throughout the complete business lifecycle.
Mike Palm
Director
About the Author mpalm@chartercapitalpartners.com

Justin Pinto, Associate Mark Streekstra

Director
Justin is an Associate in the investment banking practice
mstreekstra@chartercapitalpartners.com
at Charter Capital Partners. He joined the firm in 2016 as
an intern and has since transitioned to his current position. Elisa Berger
Vice President
As an Associate, Justin is responsible for managing and eberger@chartercapitalpartners.com
executing M&A client engagements and assists in leading
Zach Wiersma
Charter’s AIDC practice. Vice President
zwiersma@chartercapitalpartners.com
Justin’s investment banking experience includes advising
clients in merger and acquisition advisory, private capital AJ Ebels
Associate
raising, and strategic consulting for family-owned businesses aebels@chartercapitalpartners.com
across a variety of industries including AIDC, industrial
Justin Pinto
services, and healthcare. He has advised businesses ranging Associate
in size from $10 million to $100 million in enterprise value. jpinto@chartercapitalpartners.com

A native of Michigan, Justin received his BA in Business with a Mike Welch

Associate
minor in Organization Leadership from Hope College in 2018. mwelch@chartercapitalpartners.com
Justin is an active member in the community and is currently
Lance Burt
a member of ACG Western Michigan and the Van Andel Analyst
Institute JBoard. lburt@chartercapitalpartners.com

Eric Smith
Broker dealer services offered through M&A Securities Group, Inc., Analyst
Member FINRA/SiPC, a separate entity from Charter Capital Partners. esmith@chartercapitalpartners.com

Charter Capital Partners • 140 Monroe Center NW • Suite 300 • Grand Rapids, MI 49503 • 616.235.3555
chartercapitalpartners.com