and selection of buy side M&A
targets with revenues from
– Personalised approach
of the selected targets
– Analysis and selection of
the best opportunities
– Financial analysis and
structuration of offers
– Preparation of Letter of Intent
Management of the negotiation
until completion / closing
of the transaction
During this first phase of the business acquisition process, Frenger will carry out thorough research based on specific criteria defined by our clients. A selection of identified potential company targets will be presented in a “Long List”. Frenger will carry out this in depth analysis of the sector targeted by the customer through:
- Access to multiple databases
- Technical skills and expertise of the M&A services team
- Access to sector specialists
- An extensive network of M&A partners in Europe
Potential targets who meet the selection criteria set by our clients which could include: turnover, profitability, profile of customers, products and services, ownership structure, location, will be ranked in order of preference and compatibility with the pre-determined requirements.
Regular update discussions with our client helps us to calibrate and refine the long list of potential targets further. Using our expertise and experience we reduce the long list of companies to produce the ‘shortlist’.
This second phase consists of a personalised approach to the key people within the shortlisted companies. Frenger will engage with the interested targets to obtain more detailed information and to assess the strategic fit with the brief. Follow-up and feedback reports are then provided to our client on a regular basis. On the basis of this shortlist, our clients decide which company they want to meet with and we make all the necessary arrangements.
Frenger Corporate Finance has completed 90% of its buy side M&A deals with “off-market” companies.
Valuation of targets and deal structure
The valuation phase is carried out when our clients decide to make a first offer to a target company.
Various methods will be used to determine a more accurate valuation:
- The DCF (Discounted Cash Flow) method which values a company according to its future cash flows
- Trading comparables with the computation of Sales, EBITDA and EBIT multiples and creation of a peer group
- Transaction comparables with the computation of Sales, EBITDA and EBIT multiples and creation of a list of similar recent transactions in terms of target company size, sector, location and deal value
Frenger assists its clients at every step, including negotiation prior to the drafting of a “Letter of Intent”.
The Letter of Intent is the first document that presents the indicative offer considered by our client, and is used as a basis for negotiation. This is a non-binding document without any commitment on either side at this stage aside from confidentiality.
The next step of the process involves legal, fiscal and social due diligence with the assistance of audit and legal firms. This phase helps to identify potential risks that could impact the price as well as potential deal-breakers.
The drafting of legal documents follows the due diligence phase and includes the preparation of the Share Purchase Agreement, Shareholders Agreements, Put & Call Options agreement, and any Representations and Warranties, or employment agreements.
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