Price alone does not make a good deal

A “Buy Side” mandate may at first glance appear easier than a “Sell Side” or a “Capital Raise”, but in the emerging markets, execution can be a monumental challenge. Often clients utilise this service in conjunction with "Business Intelligence" services.
In a Buy Side deal, our client is the one who wishes to buy a company. In this case, the steps we follow are:

I ASSESS AND VALUE THE OPPORTUNITY
II CONTACT TARGET COMPANY OWNER(S)
III TERM SHEETS AND NEGOTIATION
IV DUE DILIGENCE
V CLOSING

I ASSESS AND VALUE THE OPPORTUNITY

We begin by thoroughly understanding the client’s objective in making an acquisition (market entry; expansion; relocation of activities). If the client has not already identified a company he wishes to acquire (a “target company”), then we can research the desired sector in order to identify potential targets, according to specific criteria which are established in discussion with the client.

To identify potential targets, we use our extensive network of personal and institutional contacts, Osprey research databases and other advisory firms, as well as trade shows, trade organisations and conferences (see also “Business Intelligence” service on this website).

If the client has identified the company he wishes to acquire, then we will review the target’s products and markets, strategy, management, competition and any other relevant, available information in order to establish a possible value for the company. If sufficient data is available, a Financial Model may be prepared in order to perform a more detailed valuation. We also research similar companies and deals so that our client has a basis on which to establish his opening bid (the price he is willing to pay for the company). Of course, it is in the client’s interest, as well as Osprey’s, to set as low a price as possible.

II CONTACT COMPANY OWNER(S)

When our client has decided what to acquire, then he must decide how it is best to approach the owners of the target company. If the client (as buyer) wishes to remain anonymous, then this is best accomplished through an intermediary. Osprey Partners handles such assignments with discretion.

Company owners are like snow flakes: in their diversity, each one is unique. Therefore, an understanding of seller motivation and perception of value is critical to achieving the best value (i.e. lowest price) for the buyer. Any financial and other information received from the target company is analyzed in order to confirm or modify the preliminary valuation conclusions reached in the first step of the transaction.

III TERM SHEETS AND NEGOTIATION

Based on the results of the steps above, and further negotiations with the target company owner, we finalise the expected Transaction Structure. We prepare and, on behalf of the buyer, submit to the seller a “Term Sheet” which summarizes the terms and conditions of the transaction. We work closely with lawyers on (both sides of) the transaction in order to ensure that the commercial intent of the documentation produced is not obscured. Throughout this process, it is our job to obtain the best conditions for our client (the buyer).

IV DUE DILIGENCE

We typically act as coordinators of the various financial, legal and industry specialist due diligence teams that may be used by the buyer. Together with our client, we define the steps to be followed, as the due diligence effort can be expensive in terms of money and time if it is not well coordinated and executed.

V CLOSING

We remain heavily involved at this stage, making sure that the lawyers focus on completing the transaction. We also help reconcile any issues that may have arisen as a result of the due diligence process.