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Financieel Management

Management always has to look at a number of potential investors because there are as many investors as there are different tastes. Knowing the trade, the financial adviser will play an important role in selecting 3 to 5 potential backers to talk to. Before the meeting the investors will receive the business plan to prepare and mana-gement will usually prepare a short investor presentation. The initial meetings will focus on getting to know each other and the business and the background to the deal. Discussions will evolve from management commitment and ambitions and the investors’ philosophy to the business itself and its prospects as well as possible deal details such as funding structure and valuation. After several meetings and fundamental discussions management will receive outline written offers (‘term sheets’) from the interested investors.

The financial adviser will negotiate the terms and then an investor or a lead investor will have to be chosen. Important criteria for management to base their decision on are personal chemistry, a mutual understanding and a compatible philosophy that matches management’s goals and the business strategy. Management will be working very closely and intensely with the investor after the buyout and these aspects are essential for a successful partnership. It is also important to choose the investor who offers the greatest chance to secure the deal. The investor must be willing to pay a reasonable price and be able to meet the vendor’s timetable. The investor must also be acceptable to the vendor, based on things like reputation and track record. A last criterion is, of course the management offer. However, management should bear all criteria in mind and not be guided solely by the financial terms of each offer. It may well be that the most competitive offer will not represent the best choice.

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