Free Mergers and Acquisitions For Dummies by Bill Snow Page A

targets gets untenable.
    Step 2: Make contact with the targets
    If the target list seems viable enough to warrant going through an M&A process (see the preceding section), Seller or Buyer begins to reach out to the targets. Some people prefer a passive approach (e-mails or letters), while others prefer a more assertive approach (phone calls). I prefer making calls when contacting Buyers (believe me, most of them are literally sitting by the phone waiting for a Seller to call). Contacting Sellers is far trickier. Check out Chapter 6 for more on contacting Buyers and Sellers.
    Avoid hyperbole at all costs. Although I’m a big fan of creating a sense of urgency and having a call to action in my correspondence, telling prospective Buyers they need to act quickly or else they’ll lose out on the greatest thing since sliced bread makes you sound like a snake oil salesman.
    Step 3: Send or receive a teaser or executive summary
    If Buyer wants to learn more about the company for sale, Seller will forward a teaser to Buyer. The teaser (sometimes called the blind teaser ) is an anonymous document that provides just enough nonconfidential information to pique the interest of Buyer. As the name implies, the teaser is designed to tease Buyer into a frenzied state of wanting to know more.
    An executive summary is similar to a teaser but isn’t anonymous. These documents are the doorway that leads to the other steps in the process. Chapter 8 provides a lot more information on these documents.
    Step 4: Execute a confidentiality agreement
    If, after reading the teaser (discussed in the preceding section), Buyer is interested in learning more about Seller, the two parties often execute a confidentiality agreement (CA). (On planet Let’s Use More Words, this document is called a nondisclosure agreement [NDA]). Essentially, Buyer promises to not share any of Seller’s confidential and nonpublic information with anyone other than Buyer’s advisors. Chapter 7 offers a detailed look at all the ins and outs of confidentiality.
    The confidentiality agreement doesn’t just extend to confidential information. As part of the agreement, Buyer usually agrees to not even mention that M&A discussions are ongoing.
    Step 5: Send or review the confidential information memorandum
    If the confidentiality issue in the preceding section is socked away and settled, Seller provides Buyer with a boatload of information, usually in the form of a book known as an offering document, deal book, or some similar title. The offering document provides a huge amount of informational about Seller: financials, customer info, employee info, products, marketing, operations, legal, real estate and fixed assets, and more. The offering document should provide sufficient information for Buyer to make an initial offer. I cover offering documents further in Chapter 8.
    Step 6: Solicit or submit an indication of interest
    If the Buyer reviews the offering document (see the preceding section) and is interested in pursuing a deal, Buyer indicates that interest in the aptly named indication of interest (IOI). An IOI provides a valuation range (not a specific price) Buyer would consider paying for the company, as well as some other basic info (estimated closing date, source of funds, basic composition of the purchase price, and so on). An IOI is nonbinding, which means it can’t be enforced in a court of law. See Chapter 9 for more.
    Step 7: Conduct management meetings
    When the Indication of Interest covered in the preceding section is acceptable to Seller, the next step is for Buyer to meet with Seller’s management team. Seller conducts the meeting, which provides a financial update as well as updates to any other issues that may be pertinent for Buyer, such as new customers, lost customers, new hires, new product launches, litigation, and so on. The meeting also allows Buyer and Seller to interact and engage in question and answer sessions — and