Demystifying the M&A transaction process

One of the many questions we get asked by our clients is about the M&A transaction process. What’s involved? How long does it take? Where do I start?

Cassie Adamini, Director at BDO in the Perth M&A team, talks through the process and breaks it down into four digestible phases.

The Assess Phase

As an M&A team our first priority is to take the time to understand you, your business, and the outcomes you want out of a transaction. “We spend a great deal of time discovering what is unique about the business in order to uncover the real value of the business and help you to assess whether what you are seeking is actually achievable in the current market environment” says Ms Adamini.

The Prepare Phase

At this stage, you have engaged us to partner with you throughout the transaction. Here it’s all about the preparation of the marketing materials which includes an information memorandum (a detailed document about the business) as well as a fully supported three-way financial model. Ms Adamini states, “As a team, we are a unique blend of financial, accounting, strategy and marketing expertise and this enables us to present a business to the market in such a way that extracts the highest value for the business”.

The Connect Phase

Equally as important as having top quality marketing materials, is having a well thought through target list to ensure the business is being presented to the most appropriate potential buyers. This is a collaborative process between us and the client and once the client agrees, we ‘Connect’ with the potential buyers on an anonymous and confidential basis. “Keeping a transaction confidential until it is completed is extremely important to a business owner and our clients put a great deal of trust in us to keep the sale confidential until the end.”

The Transact Phase
Once offers are received, negotiated by us on behalf of the client, and one accepted by the client, you’re on the home stretch. During this last phase the focus is due diligence and the negotiation of the sale and purchase agreement. Ms Adamini highlights “Due diligence requires a lot of time and expertise, and it cannot be overstated that having an adviser for this, frees you up to stay focused on the day to day running of your business. This ensures you have the best chance of the initial offer turning into money in your bank account when the transaction is completed.” Ms Adamini continues “We work closely with the client’s legal adviser to ensure the final contract of sale reflects the commercial and legal intent of the agreed initial offer. We pride ourselves on fiercely defending the offer value all the way to the end.”

The whole process can take between 6-12 months and preparation for this can begin many years in advance of selling your business. Ms Adamini concludes “If selling your business is even just a thought in the back of your mind, it’s worth a quick chat with an M&A adviser to see what groundwork you can do now to ensure you and the business are ready when the time comes.”

In 2022, the BDO Australia M&A team completed 9 deals worth over $500m in deal value.
Watch the video to learn more about the transaction process.