Process, Stages & Timing

After being engaged, Woodbridge begins by performing due diligence on a client’s company. In due diligence, we collect the materials needed for the confidential information memorandum, seek an in-depth understanding of the attributes of the business that will attract buyers, and we look for potential concerns, drilling down to fully investigate any issues so that they may be addressed in a thoughtful, proactive manner.

Woodbridge develops accurate, compelling information memorandums designed to attract sophisticated corporate and institutional buyers/investors. The memorandum contains the information that is essential to provide to potential buyers so that our clients will receive credible proposals containing realistic valuations.

A detailed financial model may be the most important document in a recapitalization assignment. The model incorporates management’s assumptions and expectations for every aspect of the business. We develop a comprehensive financial model early in the process. Throughout the process, lenders and investors will refer to the model testing assumptions and making debt capacity and pricing decisions based on it.

Financial reporting of our clients varies in sophistication. Depending on the level of sophistication and reliability of the information, considerable up-front analysis may be required. It is essential to address any issues before presenting financial information to potential buyers. If a buyer discovers material inaccuracies later in the process, it is often a deal killer.

In some cases, the existing financial reporting does not provide all of the information buyers will want. Depending on the availability and reliability of underlying data, we may compile this information and include it in the information memorandum.

Identifying the best buyers is a critical activity in this phase. We select potential buyers who fit best for a particular transaction. Targeted and exhaustive research using multiple sources is necessary to ensure comprehensive coverage. We seek a broad spectrum of buyers, but there must be a rationale for each candidate on the list. Under no circumstances will Woodbridge contact any buyer before our client approves the buyer list.

We purchase the most comprehensive, reliable database and search tools containing information on private and public companies, private equity sponsors, and specialized non-bank lenders. Additionally, we subscribe to research services that provide unlimited access to thousands of online databases and directories, periodical subscriptions, and securities research worldwide. Our philosophy is to use the best resources that are available today, while constantly seeking new and improved resources.

Effective strategic buyer research requires a strategy and process. First, we seek to confirm our understanding of the industry landscape and the relationships between the players. Next, we examine patterns of consolidation in the industry and identify consolidation drivers most applicable to our client. We then develop a thesis for positioning our client’s company to potential buyers and identify the key attributes to look for in buyer candidates. Before beginning our search, we review our thoughts on positioning and buyer criterion with our client, and solicit their input on our targeting criterion. Targeting begins with screening searches designed to identify buyer candidates with one or more of the desired attributes. Finally, we conduct in-depth research on each candidate to determine which buyers should be on the list.

We assist management in developing an effective presentation that conveys their knowledge and passion for the business, helps them tell the story of the business and explains their competitive position. For recapitalizations / private placements, we also prepare our clients to address issues that are important to lenders.

Data room: we prepare data binders containing more in-depth information than found in the information memorandum. This data is only made available to a select group of buyers who continue to express a high level of interest after meeting with management and touring company facilities. The purpose of the data binders is to expedite the process of getting definitive proposals from multiple buyers. It works because past experience tells us that certain items are likely to be requested by all buyers. Time is saved by preparing this information in advance.

Soft auction: having created a group of buyers who have invested significant time investigating the opportunity, our senior investment bankers engage in a “soft auction” where we negotiate to obtain the best combination of terms and price. These negotiations can be tense at times; having our professionals conduct these discussions shields our clients from this activity, so that their relationship with the buyer is unaffected.

Through our past involvement in a wide variety of transactions, Woodbridge has developed considerable expertise in all aspects of deal structuring and negotiation. Consideration of issues such as earn-outs, contingent purchase payments, escrows, retained equity, non-competition agreements, seller representations, warranties and indemnification, and tax aspects must be carefully made before choosing the buyer as these items are often significant elements of value and risk in a sale.

After a buyer has been selected, a letter of intent is signed. This document contains the principal terms of the transaction and it serves as the basis for preparing the purchase and sale contract.