How to Buy a Business

• Embraces both the theory and the practice of buying a business
• Insight - Takes you through the whole process, from the search and the initial approach, to closing a deal and the issues involved in finalsing terms
• Best-practice tradecraft in all types of buy-side situations
• Full discussion of how to define success – and of risks which need to be addressed
• Become aware of where value lies
• Understand the soft side of acquisitions and the interests of all stakeholders – how to make your bid the most attractive
• The trainer has been involved in negotiating and closing M&A transactions for over 25 years.

• Build confidence to help create shareholder value through the pursuit of a successful M&A strategy.
• The course helps principals and their advisers to appreciate the complex issues involved in acquising a business, through focus on risk and return, the acquisition process, investigation and valuing a target, and how to approach a target.
• The content will, in particular, allow practitioners with less experience to accelerate their learning of the buy-side role, through discussion of tradecraft, case studies and best practices.
• Highlight risk and how to mitigate - buyers overpaying, or using inappropriate financing methods, can trigger destruction of value and in some cases financial distress.
• Whilst this is a transactions course, it also introduces best practice regarding post-deal planning and how to help ensure the acquisition is successful.
• Ultimately, it is a walk-through of every aspect of buying a business – a practical guide to identifying and successfully negotiating acquisitions.

Why buy a business? Explore rationales and intent

• Corporate evolutionary cycle
• Organic growth vs alternatives
• Joint ventures vs. acquisitions
• Demands for growth – PLCs with earnings expectations
• General business theory: horizontal/ vertical integration; consolidate markets; geographic; product range etc
• Other motives: Opportunistic, financial engineering, conglomerates – (now unfashionable – why?)

Acquisition search/ Target screening – principles

• Clear basic parameters (e.g. size)
• Defined objective (market, product etc)
• Specific criteria (in and out)
• Desk research and what an adviser can add
• Identifying key decision makers

Valuing the target: basics

• Principles of valuation: assets, earnings, market
• Understand where target value is likely to lie – reference points/ comparables, etc
• Reasonable assumptions refinancing - is a deal affordable/ feasible?

Value creation framework

• Financial analysis techniques
• ROIC - WACC
• Multiple arbitrage
• Earnings enhancement/ dilution

Best practice for a buyer and their adviser – Buy side tradecraft

• How to position a bilateral approach
• Making the approach
• Building credibility: key messages
• Identify and address all stakeholders

Tactics in an auction bid process

• How to ‘play well’
• Working with limited information
• Presenting your indicative offer
• Case study – tactics to pre-empt an auction
• Case study – how not to do it

Buying through a management buyout – how the role may differ

• Advising a Private Equity house
• Exit review
• Advising a management team
• Management terms

Buying from an administrator, or in a distressed situation – special characteristics

Due diligence

• Dealing with VDD and databooks – buyer perspective
• How to challenge seller’s presentation of earnings: quality of earnings, normalisation and proforma adjustments
• Be clear on all the information you need – and what may be outstanding
• Other diligence streams which add value – synergies, integration, operational
• A framework for dealing with due diligence discoveries

Earn-outs: bridging headline differences on value

• Case studies/ discussion – lessons from deals that did not work out

Heads of agreement and exclusivity

• What exclusivity signifies – and what it takes to get there

Cash, debt and working capital – buyer perspective on the equity bridge and completion mechanisms

• When a locked box (seller-friendly) may be appropriate/ should be accepted

Legal overview – what buyers should look for

• Advantages of drafting the purchase agreement
• Warranties and indemnities
• Disclosure letter – interaction with due diligence and deal terms
• Escrow, retention

Creating shareholder value through the pursuit of a successful M & A strategy is widely practiced, but is certainly not risk-free. Buyers overpaying or using inappropriate financing methods can destroy value, and in some cases trigger financial distress and the implosion of their own business.

How to Buy a Business therefore starts with a focus on how to create value through M & A, with a simple framework for assessing acquisition opportunities. There is also a section on how to plan ahead and make sure an acquisition is successful.

The course then covers tradecraft around approaching acquisition targets, whether through widely marketed processes or ‘off market’, with a focus on best practice in each case, and the importance of being a ‘good buyer’ in all circumstances.

In addition, the course contains a valuation primer and guidance on final pricing.

How to Buy a Business is a practical guide to all aspects of the M & A process and will be useful to anyone on the buy-side in M & A, whether as adviser or client.