Mergers and Acquisitions
Silverwood Partners provides comprehensive mergers & acquisitions transaction execution capabilities, including:
Silverwood Partners views the decision to sell a company as a process that involves planning, management, and preparation to obtain the best possible price and terms in a transaction. The reasons for initiating a sale process vary but are typically strategic in nature and may include a need for capital, gaining access to complementary technologies, achieving marketing leverage through an established brand name, or gaining access to improved sales, service, and distribution channels.
Each sale or merger presents a unique set of challenges that can only be overcome through extensive transaction experience and deep sector knowledge. Silverwood's senior professionals are all seasoned investment bankers with extensive experience in implementing a disciplined sale process that includes gaining a thorough understanding of the client, the competitive landscape in which it operates, its culture, and potential. With Silverwood's detailed industry knowledge all such considerations are taken into account to optimally position a client's business with potential strategic partners.
Silverwood's objective is to maximize the sale price by identifying and working with buyers who are most likely to pay a premium price. From the tactical perspective, Silverwood uses its findings and the client's preferences to develop a recommended pricing strategy and procedures for the sale. Ultimately, the selected approach may be a negotiated sale with the highest potential buyer, a limited auction, or a wide auction. Regardless of approach, an important aspect of any sale process is to create competition among buyers to maximize the sale price and optimize transaction terms.
In preparation for the sale, Silverwood analyzes the business and its competitive profile to determine the most logical buyers based on the strategic fit and business rationale for each potential acquiror. In addition, Silverwood develops an estimated valuation range for the business based on its likely performance under the ownership and management of the highest-potential strategic buyers.
The principal aspects of the sale process are: research, identify, screen, prioritize, and contact prospective buyers for the business.
- Prepare a comprehensive information memorandum that includes financial, qualitative, industry, and competitive information, and that highlights the investment opportunity and its strategic and financial value to prospective purchasers.
- Distribute the information memorandum to selected buyers and manage the various requests for additional information, respond to questions, and coordinate visits to facilities and meetings with management.
- Maintain a competitive environment by moving multiple potential buyers forward simultaneously, carefully managing due diligence and the data room, and assisting buyers in preparing initial offers or letters of intent.
- Evaluate alternative offers, including any financing contingencies, and assist in negotiating the terms, conditions, structure, and pricing of a transaction to best achieve the seller's objectives. At a client's request, Silverwood will serve as lead negotiator.
- Provide all supervision required through the contract stage and assist with all matters that pertain to closing with the goal of maintaining momentum through the successful closure of a transaction.
Silverwood's corporate acquisition advisory services range from assisting clients with situations where the counterparts are already discussing a transaction to assisting clients in locating suitable acquisition candidates and with related transactions.
Silverwood utilizes its in-depth sector knowledge and transaction experience to assist clients with a broad range of acquisition situations - from fill-in technology or product acquisitions to larger merger-of-equals transactions. In each case, Silverwood responds to a need for an advisor with a deep understanding of the industry sector concerned, and proven execution capabilities accumulated by the firm's principals over decades of transaction experience. The firm's professionals understand negotiating tactics, transaction structuring, legal and business due diligence, financing considerations, board level decision making considerations, and the many requirements associated with working as part of a multi-disciplinary transaction team.
Silverwood is typically retained to provide a highly informed third party perspective on transactions of all sizes and, in many cases, to render a fairness opinion in connection with a transaction.
As a result of Silverwood's sector focus, extensive industry contacts and transaction expertise, the firm is retained by clients to assist in locating suitable acquisition candidates and in executing related transactions. A phased approach is used for each Silverwood acquisition engagement:
- Definition of Acquisition Criteria
A generic profile of a target company is formed and related to those in the chosen market.
- Conducting the Search Process
Silverwood searches the firm's industry databases to identify companies matching the target profile, and provide brief summaries on a comprehensive list of target candidates.
- Analysis of Target Companies
A short-list of high potential companies is examined in greater depth and a more detailed profile is developed for each company that reviews key products, markets, clients, accounts, and key personnel.
Introduction and Negotiation
Silverwood approaches target companies on a confidential third party basis and, if appropriate, makes a formal introduction. Silverwood then provides direct assistance during discussions and transaction negotiations.
Due Diligence and Conclusion
Silverwood provides support and guidance throughout the due diligence and definitive documentation process in working toward a successful transaction closing.
The business environment is constantly changing. Change can happen over a relatively long period of time, or it can be abrupt or event-driven. Whatever the precipitating factor; capital, competition, or technology, a business may have a need to evaluate its strategic alternatives and determine an appropriate course of action for the maximization of shareholder value.
A typical engagement involves Silverwood working with a client's senior management and Board to:
- Develop a detailed understanding of the strategic business units within an organization
- Provide a competitive analysis for each business unit and the combined company for use in strategic decision making through Silverwood's in-depth industry knowledge and a client's industry perspective
- Determine the optimal strategy for maximizing the value of each business unit, i.e., retain the business, sell the business, merge the business with another similarly sized operation, or spin-out the business by selling a minority stake to an institutional investor
- Drive the decision making process forward into transaction execution
Silverwood's principals have extensive experience in assisting clients with strategic alternative assessments and in implementing recommended action plans.
Silverwood's principals have significant experience in Management Buyouts, Joint Ventures, Recapitalizations, Restructurings, Spin-outs, Spin-offs, and many other complex transactions. In such transactions Silverwood provides balanced advice that allows for the benefits of a complex transaction to be tangibly realized while maintaining a sharp focus on the business rationale that is of foremost importance in any corporate undertaking.
Silverwood's professionals draw on many years of industry and transaction experience to provide highly informed counsel in connection with transaction structuring, legal and business due diligence, financing considerations, and board level decision making.
Investment banks frequently analyze the financial effects of combining two businesses. Of equal importance are the strategic and qualitative issues associated with merging two companies. Such issues are more difficult to assess as a detailed industry understanding is required. Silverwood has developed a proprietary methodology for comprehensively reviewing the strategic, qualitative, and quantitative aspects of a proposed business combination: the Strategic Pro Forma®.
As part of a Strategic Pro Forma®, Silverwood uses its in-depth sector knowledge and research resources to review and analyze issues that affect each company separately pre-transaction and the combined business post-transaction, such as:
- Fundamental industry trends
- Product lines and service offerings
- Manufacturing and service delivery resources
- Sales force coverage by product, geography, or channel
- Distributor relationships
- Brand, marketing, and business development resources
- Service and support resources
- Customer or segment coverage
- General and administrative costs
- Income statement, balance sheet, and cash flow statement
- Capital structure
- Earnings per share and valuation implications
- Stockholder profile
Silverwood's Strategic Pro Forma® is used by corporate senior management and Boards as an important tool in the decision making process that is an integral part of each merger or acquisition transaction.
A possible outcome of a strategic assessment is a determination that all or part of a business would benefit from the scale of a larger entity. Factors that drive such a decision may include a need for capital, gaining access to complementary technologies, achieving marketing leverage through an established brand name, or gaining access to improved sales, service, and distribution channels.
A consistent aspect of Silverwood's strategic execution is the creation of multiple transaction opportunities such that a client has alternatives and the strongest possible negotiating position when structuring a transaction. Silverwood first positions a business as an attractive partner and then accesses extensive industry relationships to present opportunities that create long-term value for the firm's clients. Through the firm's research initiatives and active transaction flow, Silverwood is in frequent contact with corporate decision makers who are actively pursuing strategic investments, mergers, and acquisitions.