Buy-Side M&A

The greatest challenge facing technology companies today is fulfilling the needs of its customers while remaining ahead of its competitors. Rapid change in technology advancements means companies must consistently invest in research and development. To complicate matters more, finding and keeping the right talent is an equal and correlated challenge.

One alternative to developing products and services in-house is to acquire companies that already possess the technology and a track record of success with paying customers.

The KROST team can perform the following industry-specific Buy-Side M&A functions:

  1. Acquisition Criteria – Assist in creating the necessary criteria for the acquisition. Acquisition criteria can include size, industry niche, customer base, financial performance, and geographic location.
  2. Research & Outreach – Once the criteria have been established, we can research, find, and reach-out to potential targets that, based on external data, seem to fit the criteria.
  3. Analysis of Target – If the owner/managers of the target have responded favorably to a potential acquisition, the KROST team can request data and conduct the analysis of the target to confirm a match of the target’s attributes with the criteria.
  4. Negotiations and Offers – Once concrete dialogue has been established, the KROST team can begin negotiating deal terms with the target, then provide written offers in the form of Indications of Interest and Letters of Intent.
  5. Due Diligence – Once a Letter of Intent has been signed, we can begin the comprehensive Due Diligence process. Details on our Buy-Side Due Diligence services {link text}
  6. Transactional Support & Closing – The KROST team remains involved, supporting legal counsel and executing key tasks such as calculating working capital requirements, performing tax advisory such as purchase price allocation and other tasks until the successful close of the transaction.
  7. Post-Closing Activity – KROST can provide clients with several post-close services such as accounting support, audit activities, and tax advisory and compliance.

Sell Side M&A

At some point in the lifecycle of a technology business, owners must consider the merits of selling some or all of their company. This may be because of the long-term need to re-invest capital that may be better conducted by a company with more capacity to do so, or by the short-term trigger of an unsolicited approach by a buyer. Whatever the reason, KROST’s team of experts can help sell technology businesses with a process that is geared to maximize valuation and reduce risk.

KROST can perform the following Sell-Side M&A functions:

  1. Data Preparation – Before going to market, the KROST team will prepare:

    2. a. A detailed Confidential Information Memorandum
    b. Executive Summary
    c. Financial Model that will include historical and projected financial data
    d. A list of potential buyers will also be created based on our known network of buyers and by research conducted against 3rd party M&A databases.

  2. Marketing – Once the documents are ready, potential buyers are contacted and interested parties are presented with the materials. Multiple conference calls and online meetings occur during this phase.
  3. Deal Negotiation – Once sufficient interest is detected; buyers are asked to submit Indications of Interest on a competitive basis. Once selected buyers have been given management presentations by the seller’s executive team, Letters of Intent are requested from those buyers, also on a competitive basis. Subsequent to that, one Letter of Intent is signed by buyer and seller.
  4. Due Diligence – Once the Letter of Intent is signed, due diligence begins. The KROST team will lead financial, tax, and operational due diligence on behalf of the seller providing the necessary data for the buyer, answering questions from the buyer’s due diligence teams. Issues such as target working capital calculations and purchase price allocation are handled at this stage.
  5. Legal – The KROST team will support the seller’s legal team during the drafting and negotiation of the final legal agreements including assistance with schedules.
  6. Closing – The KROST team remains involved until all legal documents have been signed and funds have been received by the seller.