Mergers and Acquisitions
Buying, acquiring, or merging business entities can strongly accelerate business growth and increase value. In every acquisition we expect a stronger company, more growth opportunities and a more resilient entity. Keystone Partners is experienced in the complexities of the acquisition processes, including the organizational elements needed for successful operations post transaction.
Keystone maintains updated databases of US and international companies and ownership entities with resources to enhance the interests of our clients.
The Keystone Method for Acquisitions
The KEYTONE METHOD is a PROCESS APPROACH designed to find the right opportunity to build your business through an acquisition or merger. Organic growth can seem the safest path for building value. It also involves unintended risks due to reduced resiliency in “down” markets and vulnerability to competitive threats. The opportunities for added value and growth are frequently enhanced through the acquisition of key capabilities, customer base and intellectual property.
A successful acquisition is usually not the product of happenstance. The right opportunity seldom presents itself within a desired time frame. Frequently, the right opportunities are not even “on the market”.
The KEYSTONE METHOD is a process involving 13 separate activities, each one carefully planned and properly executed to ensure a smooth transition to the next activity. Proper execution of each activity is crucial to the overall success and the enhancement of your company. This greatly enhances the probability of success and gives you ability to monitor and be engaged throughout the entire process.
Planning and Assessment
The process begins with careful assessment of the areas for potential opportunity, a discussion of the organizational strengths and resources to be used, and the geography to be considered. Our objective is to begin to understand your objectives, listen, and learn about your business plans.
The right strategic fit must coincide with the direction of your company and the growth you intend. Geography, “vertical” or “horizontal” strategy, acquisition cost all must be part of the parameters. Acceptable and doubtful alternatives are clearly defined.
Company types (individual or groups of SIC and NAICS codes) size of company, number of employees, types of product and intellectual property are all part of the defined profile. This sets the stage for identifying companies that may provide the right fit, but which are not already known.
The process of identifying opportunities involves strict confidentiality. Your identity is not disclosed until there is comfort that there is a legitimate opportunity for mutual benefit. Similarly, target companies will entertain conversation unless they are comfortable that their position is protected. Most companies do not want rumors they may even be “on the market”. KEYSTONE conducts a discrete campaign to identify possibilities while protecting the interests of you and prospective targets. The result is a list of companies for consideration in the next steps.
The narrowing of potential acquisitions must include research about the prospective companies and their fit with your company. Characteristics of the management team, customer reputation, and financial performance are all part of the decision to move forward with an opportunity. KEYSTONE identifies these factors and works with you to decide where negotiations are likely to be most productive.
Engage Initial Negotiations
Key persons in the target company – generally the owner, CEO or board of directors – are engaged to discover expectations in an acquisition. What is necessary? What is desired? What terms and conditions might work for the target company. Determining how this might fit with your profiles is developed early in the process.
Select Favorable Opportunities
KEYSTONE will work with you to select, and deselect, candidates for an acquisition or merger. Realistically, only one candidate can truly be considered at a given time. Some companies usually stand out as the most attractive. Others may be interesting and could represent a future consideration. The distinction is made at this point.
Letter of Intent
A Letter of Intent is used to outline what you are willing to offer for the acquisition of or merger with another company. It is the "Agreement to Agree" with the target. This document outlines terms, conditions, amounts and contingencies as a step toward final agreement. KEYSTONE will help assure you that this extremely important step is done thoroughly and thoughtfully.
This step involves a detailed investigation by you and your team into the target business. KEYSTONE will coordinate and communicate with the targets due diligence team and will be there to assist you through this entire critical phase of the transaction.
During this phase, all the documentation for the transaction comes together. We use our experience to review the acquisition or merger agreement, exhibits and related documents to make recommendations, and assist in resolving last minute differences. KEYSTONE will work closely with your team of professional advisers, attorneys, and CPA’s to finalize the agreement.
This represents the culmination of our work, the end result that the KEYSTONE METHOD is designed to achieve at the maximum reward for your company – our valued client!
The most successful acquisitions are executed quickly and cleanly, with clear direction from the start. Questions or confusion will raise concerns with customers and employees that are not necessary or welcome. KEYSTONE can work with your team to identify, clarify and communicate issues for this critical phase.