If you’ve recently signed a Non-Disclosure Agreement (NDA) with us, congratulations! It means you’ve caught our attention, and after an initial high-level discussion, we see something compelling in your business. You’re probably wondering what happens next, so let’s unpack the process clearly and transparently.
Sharing Information Without the Headache
We used to rely on sellers populating a standard data collection template we provided them, but we’ve since pivoted to an approach that prioritizes convenience and efficiency. We now encourage you to simply share what you already have readily available. In most cases sellers have the following readily available:
- Financial statements (Income Statements, ideally covering the past 5 years to understand trends clearly, most current Balance Sheet)
- Existing presentations or company overviews (no need to produce new materials)
- If possible, an anonymized billing file, (to help us accurately understand your recurring revenue)
Typically, this initial data shouldn’t take more than a few minutes to put together—often as easy as exporting standard reports from QuickBooks and sending over existing presentation materials.
Putting Together a Valuation Estimate
Once we’ve reviewed your materials, we quickly move to provide a valuation estimate. This process rarely takes longer than one to two days—sometimes only hours if we have all the necessary information upfront. We approach valuation thoughtfully and transparently, looking at what the company’s long term strategy is, how we can assist it and what the resulting cash flows could be. When developing the company’s forecast we consider long-term strategy, the market opportunity, synergy effects, current cost structures and compare it all with our internal benchmarks. For an in depth discussion about how we determine pricing see more here. Once we’ve arrived at what we think is a fair value of the company, we share that number with you without playing any negotiating games. Our initial price we share is our best price. No haggling, no lowballing. Our valuation is built around hitting our hurdle rates and return expectations, not squeezing every penny out of a deal. In some rare cases, we may have misunderstood some aspects of your business which may warrant us going back to the drawing board. But in the vast majority of cases, our price rarely moves, if at all by not much, from the original offer we’ve given. If we’re happy and you’re satisfied, we’re both ahead.
If We’re Aligned—Next Steps
If our indicative valuation aligns with your expectations, the next step is to draft a formal Letter of Intent (LOI). This document sketches the detailed terms and conditions of our proposed acquisition. We’ll dive deeper into this in a future post, but rest assured that clarity and fairness are paramount in this step as well.
If We’re Not Aligned—You Still Gain
Should our valuation differ significantly from your expectations, we still believe the process brings considerable value. Unlike many buyers, we’ll transparently share our valuation model, highlighting precisely how we arrived at our number. This transparency serves two purposes:
- It allows you to quickly identify and correct any misunderstandings or assumptions we may have made about your business.
- It identifies transparently areas where improving your operations could substantially boost your valuation in the future.
Even if we’re not immediately aligned, you’ll gain insights into how professional investors view your business—and that should be valuable to most sellers. Often, sellers return to us after making adjustments, and we’re always open to exploring again down the line.
Ultimately, signing the NDA and engaging with us should feel productive, efficient, and illuminating. Whether or not we finalize a deal right now, you’ll leave with clarity and actionable insights into your business’s valuation and growth opportunities.
We look forward to the possibility of working together!