Our evaluation and investment process is about working to meet the seller’s objectives and as such our approach will be adapted but is likely to include some or all of the steps outlined below.
Following an initial introductory meeting to scope the project and to discuss objectives we undertake some external research to better understand the company or portfolio of companies.
We would enter into a confidentiality agreement with the seller and arrange to visit the seller’s offices to undertake initial due diligence in which we would review the available investor documentation. This might include documents describing the shareholding and capital structure, investor presentations, board minutes etc. We are always keen to learn the seller’s perspective of the companies – the opportunities and the challenges.
Following initial due diligence we prepare a written preliminary offer which is typically subject to contract and detailed due diligence.
If this offer proves to be acceptable we ask for a period of exclusivity in which we meet with the portfolio company management, undertake confirmatory due diligence and work with the seller to prepare a sale and purchase agreement.
We keep our Investment Committee informed as deals develop to ensure that the necessary approvals do not fall on the critical path or otherwise delay the process.
Some sellers prefer or feel more comfortable with an auction process. Inevitably, auction processes involves multiple parties and, one way or another, portfolio company managers, board members and co-investors tend to learn about the potential sale.
Often we find that sellers prefer to initially explore the option of a secondary sale without it becoming public knowledge. They may not want to unsettle management or co-investors until they are certain that they want to proceed with a transaction.
We respect and are comfortable to work on this basis. Azini worked with one seller for more than 18 months. The transaction only became public information when it was announced some weeks after completion.