In IB a “Sell-side” mandate simply put is a transaction where an Investment Bank has been hired by a client to find potential investors/buyers for either a complete exit or stake sale
The typical process structure involves (not exhaustive)
1) Teaser:
A “no-name” 1-2 pager document highlighting the USPs of the company up for sale/seeking investment. As the name suggests, idea is to disclose just “enough” information to create an interest without giving out too many details/name of the company
2) List of Potential Acquirers:
Screening a list of potential buyers from various sources like Capital IQ, Bloomberg, Factset, Industry Associations, MD Network etc. The teaser is shared with all these initial potential investors. This phase requires patience as many of the potentials will not be interested but few of them will like to take a further look at the opportunity
3) NDA Process:
Interested parties are required to sign a “Non-Disclosure Agreement” in-order to gain further information on the investment opportunity. This will require the IB to co-ordinate with legal advisors and ensure the NDA has clauses from all related parties
4) Information Memorandum:
Creating and circulating information memorandums to potential investors. This document gives detailed overview of the client’s business, industry, potential valuation and other related details
5) Indicative Offers:
After analysis of the IM, if a potential investor confirms their interest in the proposed transaction then they are required to submit an “Indicative Offer”
These are non-binding offers with the preliminary purchase price indications, rough set of terms and conditions
I will continue my article in the next post given the length and details.
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