First Round
- Identify potential target firms
- Reach out to gauge interest with teaser; sign CA (confidential agreement) and receive CIM (confidential information memorandum) and basic financial projections
- Send letter of intent (LOI) with preliminary offer, which is not legally binding
Second Round
- Access to data room, including monthly financials, key company files, contracts, market analysis, product / service details, etc.
- Perform detailed analysis and financial modeling, present to internal team for approval
- Site visit, management meetings, due diligence questions
- Send updated offer with SPA (sales and purchase agreement) which is a legally binding offer
Third Round
- Usually exclusive, meaning buyer can spend on third party due diligence (DD) without risking being overtaken by another buyer
- Third party DD includes: accounting, legal, tax, accounting, quality of earnings, environmental, management, background checks, consulting / market research, etc.
- Close transaction, send wire transfer