# The M&A Cheat Sheet

*March 4, 2020*

What is involved with a full M&A process? How long does it take? How much do I have to be involved? You have questions, we have answers.

As a founder, going through an M&A process can be stressful yet rewarding. It requires planning, preparation, and coordination for success. This article outlines what to expect during a full M&A process managed by Discretion Capital.

## Pre-Diligence

Pre-diligence ensures your company is positioned well for sale through comprehensive analysis of financials, intellectual property, SaaS metrics, and other relevant data buyers evaluate. This 2-6 week process identifies issues requiring attention before market entry.

The process examines revenue, profit margins, and cash flow to assess financial health. Since major buyers often engage firms like KPMG or EY for financial review, preparation is essential. Intellectual property review ensures no ownership issues exist regarding software or IP. SaaS metrics including churn, NRR, CAC, and LTV receive detailed attention, as acquirers conduct deep dives into these areas.

## Create Marketing Materials

Once the company passes initial assessment, three key documents are developed: a no-name teaser (brief, anonymous overview), a Confidential Information Memorandum (detailed deck with company history, operations, financials, products, market position, and growth potential), and a financial package.

The CIM remains confidential, shared only with NDA-signed prospects. It helps buyers assess value, growth potential, and competitive position while identifying potential risks. Comprehensive disclosure prevents re-trading based on "new information" discovered during due diligence.

## Identify Acquirers

Using proprietary systems and existing buyer networks, 100-150 potential acquirers are typically identified. The firm's systems analyze data from numerous sources identifying strategic interest. Founder input on niche knowledge and existing partnerships helps identify additional strategic buyers.

## Go to Market

Marketing spans approximately four to six weeks with minimal founder involvement, allowing focus on operations. Stage one involves sharing the no-name teaser with potential buyers. Stage two begins once interested parties sign NDAs and receive the CIM and financial package. Founders should expect to respond to questions and requests for additional information.

## Management Meetings

Interested buyers schedule management meetings with founders (and potentially management teams) to assess cultural fit and clarify questions about financials and growth strategies. These typically occur over one to two weeks. In competitive situations, an intermediate Indication of Interest (IOI) step may precede management meetings, helping prioritize promising candidates.

## LOI Deadline

A deadline is established to create competitive pressure, preventing strategic buyers from deliberate delays and maintaining focus on the opportunity.

## Due Diligence

After selecting the most favorable offer, founders typically sign exclusivity agreements preventing solicitation of other acquirers. Due diligence lasts 45-90 days (sometimes longer), involving deep investigation of financials, operations, legal compliance, and other business aspects.

Buyers often engage external consultants like KPMG or EY for analyses including Quality of Earnings assessments, evaluating sustainability and accuracy of reported earnings. Pre-diligence work proves invaluable here. This stage demands extensive documentation, numerous inquiries, and continued business management — requiring experienced guidance to alleviate stress and manage expectations.

## Close

Following successful due diligence, the deal closes with agreed-upon cash payment. Depending on deal structure, the founder may transition to working for the acquirer.

## Conclusion

Understanding each M&A stage enables founders to prepare effectively. Hiring a reputable M&A team ensures a positive outcome throughout the complex, time-consuming process.

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**Ready to learn more about the M&A process?** Reach out to [einar@discretioncapital.com](mailto:einar@discretioncapital.com) or [schedule a call](https://discretioncapital.com/contact).