Merchant Banking
Crown acquisitions go through several steps, some of which overlap.
Most of the potential acquisitions we review come to us from professional intermediaries. We prefer to receive a complete selling memorandum, but often we get only product brochures and financial statements.
Typically we review the initial information within two weeks, then inform the intermediary of our level of interest.
Telephone Contact or Site Visit
When we visit a company, we like to have the facilities tour soon after we arrive, since seeing the company in operation helps us better understand its business. We do keep a low profile on site, because very often the company does not want its employees to know it is for sale.
After further research, we submit a Term Sheet or a Letter of Intent to the seller. We prefer to negotiate all of the significant deal points up front.
Purchase and sale agreement, due diligence and Definitive Purchase Agreement.
After the Term Sheet or Letter of Intent is concluded, Crown proceeds with due diligence — typically a 30- to 45-day process — and then, assuming the transaction continues, to the Definitive Purchase Agreement, or DPA, which is the document the parties negotiate in order to proceed to the closing.
If a company hasn't been audited recently, it may need to engage an accounting firm for an audit of the past two or three years of the company's history.
The easiest way to reduce the audit bill is to have a competent internal financial person and well- organized accounting records. In some cases, Crown will reimburse the seller at closing for the cost of the audit. To speed up the acquisition process, we recommend that a company engage the audit as early as possible.
The next step is a telephone call and/or a site visit to the prospective acquisiton. We always insist on dealing with the decision makers.
Crown Capital
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