My partner and I have signed an NDA with a company we are looking to acquire. We have had an initial phone conversation in which the owner expressed interest in selling and we are looking to set up a zoom meeting. What information should we request initially? We have the Stanford primer DD list, but that is definitely overwhelming at this stage. We were thinking historical financial statements and number of customers/customer lists. I'm curious to hear everyone's thoughts on this.
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- Ask for historical financials, at least 3-5 years and the buget for###-###-#### We're coming off a COVID-influenced year, and it's important to know how the owner sees the future.
- Data on future CAPEX investments
- Revenue splits on products/markets, ev. customers
- Shareholder structure
- last but not least, an official presentation of the company with history, products... as the owner would do to his most important customer.
With this data, it is a very good basis to make a first analysis of the company.
Like Mike commented best is to talk first and "feel" what is the level of trust, build trust first.
Target is to understand history 3-5 years, volatility in revenues and costs. Understand main revenue drivers and customer portfolio, margin. Based on history forecast future 5 years and bridge & define questions accordingly, understand CAPEX, cash flow and TO-BE run rate P&L. Info collection usually take time for the seller 3-4 weeks. In case of sensitive info customers can be built to "clusters, no names". Works well in Finland at least. From process point of view key is after this stage to agree price and deal structure with seller.. If you do not find common language, no use to spend time. Secondly approach is more efficient for the parties. Sending full DD list is in my opinion not right approach to start with - it comes later at verification stage. "Never go-for the deal if key info missing". Hopefully I was clear enough.