Complex transactions and even those that appear quite simple, require a broad spectrum of skills and disciplines, from strategic planning, market assessment, technology evaluation and people judgment, to financial analysis, deal structuring and negotiations, to financial and legal engineering. Too often these different perspectives are not properly coordinated and balanced during the transaction process. Success in acquisitions and divestitures today demands the effective integration of these skills.

THE TRANSACTION PROCESS

I. Planning

• Strategy Formulation
• Transaction Criteria
• Search Universe

II. Analysis

• Candidate Screening
• Evaluation Analysis
• Target Selection

III. Implementation

• Approach Strategy
• Negotiations and Closing

IV. Post Transaction

• Integration

Overview
HARTFORD CAPITAL works for clients on a confidentially retained basis to acquire businesses, products and technologies to meet specific strategic requirements in response to emerging opportunities.

We identify and develop prospective buyers and sellers, functioning as confidential intermediaries, to select and qualify unique and often unknown opportunities synergistic to the client’s required objectives.

HARTFORD CAPITAL has the credentials and contacts with executive decision makers of private and publicly held companies; the investment banking community; LBO specialists; and partnerships who own, control, or have financial interest in many diverse market segments.

Client Review
Prior to starting our business development process, we establish the following profile:

The client’s near term strategy, real core capabilities and demonstrated competencies.

• Areas for growth, expansion or divestiture.
• Alternatives to an acquisition or divestiture (if appropriate) including technological transfers, licenses, product-line/asset purchases to turnkeying a start-up venture.
• Budgets.
• Time requirements.

Establish Objectives
We will develop an agreed-to time phase acquisition strategy based on criteria which includes:

• Targeting product/market segments and value-added positions, which are particularly attractive (or threatening) to specific business areas.
• Competitive urgency.
• Affordability/materiality.
• Strategic and tactical objectives.
• Potential impact on shareholder value.

Additionally, HARTFORD CAPITAL conducts comprehensive and penetrating industry characterizations and analyses for clients primarily interested in entering new businesses or obtaining independent verification of existing businesses that include:

• Industry size, scope, trends and direction.
• Primary, secondary and tertiary companies.
• Customer profiles.
• Threats (technology obsolescence, substitute products).

This type of review can be performed for one or any number of industries, market segments, products, etc., as required to address key strategic issues, confirms or redirects current planning or establish viable action plans.

Kick-Off Meeting and Follow-Through
We typically budget a series of two to three work sessions in the first month to cover all items outlined in the Client Review and Establish Objectives sections.

The decisions reached are then defined in detailed statements of work and acted upon.  Activities are generally reported weekly by phone and written summary reports submitted the last working day of each month.

Executing Transactions

Orientation
Prepare the Descriptive Memorandum that includes positioning the client in the best possible light by recasting financials, preparing strategic and tactical plans, developing appropriate market, product and competitor information, etc.

• Prepare all collateral materials, such as, letters of introduction, confidentiality agreements, etc.
• Aggressively market to all appropriate organizations, develop sincere expressions of interest, define and rank the merit of each initial offer.
• Assist or lead (depending on client preference) in negotiating and creatively structuring the transaction(s), especially as needed to close valuation gaps between the buyer and seller.

Implementation
For those areas ready for aggressive implementation we will identify, screen and profile target companies. Steps include:

• Develop a highly tailored communications strategy to best position the buyer in the mind of the target.  This is followed by a letter of introduction and Buyer’s Credential Profile (anonymous or open, depending upon the circumstances), which establishes a positive image in the seller’s mind regarding the management strengths of the buyer and his ability to successfully conclude the transaction.
• Assist or lead in negotiating and creatively structuring the transaction(s), particularly as needed to close valuation gaps in the judgment of the seller.

Valuation
If requested, we will provide fairness opinion and a valuation of the target company.  Such valuation judgment is normally based upon, in part, a study of the company’s financial and operating record; a comparison of its performance with other companies in its industry; relative market performance of the company’s publicly traded securities (or appropriate proxies); ownership characteristics; analysis of the fair market value of certain important assets and backlog; and a study of the capitalization of the company.  In addition, we temper and refine the valuation analysis based upon what we believe the target’s worth to be to other competitors, as well as, via discussions with the client’s operating and financial management.

Project Management

Following the execution of this agreement, we will assist in organizing and coordinating the client’s multi-disciplinary task team and the activities of any other experts/advisors that normally participate in the acquisition, due diligence and integration process.  We are available to assist in the numerous technical details required to close a transaction. Subsequent steps may include: drafting the letter of intent; an asset purchase or merger agreement; helping to design employment and bonus agreements; or coordination of collateral approval materials. These tasks are often the most time-consuming parts of the transaction, requiring the anticipation and solution of inevitable issues that often derail an attractive project.  We also provide the judgment and experience to constructively coordinate attorneys, accountants and other in-house or outside experts.

Responsibilities

In accordance with its established professional procedures, HARTFORD CAPITAL maintains strict confidentiality concerning the client’s corporate development strategy and the target company being considered.  We recognize that we have a fiduciary duty to the client and its affiliates and shall at all times perform our duties in accordance with the highest levels of skill and diligence common to those performing similar services.  HARTFIRD CAPITAL does not approach target companies on a client’s behalf unless specifically authorized to do so by the client. 

HARTFORD CAPITAL’s Steps For Selling A Business

HARTFORD CAPITAL guides a potential seller from the initial decision to consider the sale of a business to the closing of the transaction. The five basic steps involved are:

I. Establishing Client Goals

II. Valuing the Business

III. Preparing the Selling Memorandum

IV. Screening for Potential Buyers

V. Structuring, Negotiating and Closing

Establishing Client Goals

Deciding whether or not to sell a business can be one of the most difficult decisions a client will ever have to make. Objectivity is often clouded by emotions and personal desires as well as outside market factors.  Engaging an independent professional such as HARTFORD CAPITAL can help a client to formalize their goals and assess the available alternatives.

Through meetings with members of the HARTFORD CAPITAL team, and other advisors you think appropriate, a clear understanding of the desires and needs of the shareholders and management will emerge.  This understanding, coupled with a realistic assessment of the business, its requirements and prospects, will help determine the best course of action. If alternatives other than sale or merger appear to be more feasible, these, too, can be discussed and pursued.

These preliminary, very confidential discussions are the beginning of a close working relationship between the client and HARTFORD CAPITAL, an essential ingredient in a transaction of this magnitude and significance.

Valuing The Business

One of the major steps in selling a business is the determination of its real value. Proper valuation requires an extensive investigation of the business and an assessment of its future within the context of its industry, geography and the general economic climate.

The members of HARTFORD CAPITAL are well qualified for this task.  Their backgrounds and disciplines include investment banking, security analysis, law, commercial banking and accounting.

HARTFORD CAPITAL professionals have years of expertise not only as independent appraisers of businesses, but also in the buying and selling of businesses both as principal and agent. HARTFORD CAPITAL’s personnel have also provided expert witness testimony regarding valuation before various courts and at the Agent and Appeals Division levels of the Internal Revenue Service.

Preparing The Selling Memorandum

Frequently, a potential buyer’s initial introduction to the client’s business is from written material.  An essential part of the selling process, therefore, is the proper preparation of the Summary Fact Sheet and the Confidential Descriptive Memorandum.

HARTFORD CAPITAL works with the client and their advisors to prepare these documents to provide the prospective purchaser with information on the business. HARTFORD CAPITAL employs a Summary Fact Sheet concept to provide preliminary information about the business without necessarily revealing the client’s name or any proprietary information.

Once a confidentiality and nondisclosure agreement have been signed by an interested party, HARTFORD CAPITAL then releases a Confidential Descriptive Memorandum that includes a more detailed review of the business history, products and services, management, industry, financial status and future outlook.

HARTFORD CAPITAL understands that selling memoranda are confidential documents.  Therefore, they are only given to screened, capable, and serious prospective buyers that have signed confidentiality agreements prior to their receipt.

Not only are properly prepared selling memorandums important in generating viable buyers, but also they are an indication of the importance of the business being sold as well as the professionalism and sincerity behind the project.

Screening For Potential Buyers

While an owner or management is well aware of its business’ direct competitors, these firms are not usually the most suitable buyers.  The identification and screening of potential synergistic, management and financial buyers require a wide range of resources.

HARTFORD CAPITAL is in regular contact with the members of the investment banking community, as well as, a wide variety of individual investors, venture capitalists, management groups, foreign and domestic, private and public companies.

HARTFORD CAPITAL maintains an active database of all publicly traded and privately held companies. This resource is further leveraged by HARTFORD CAPITAL’s eighteen years of personal contacts in the merger, acquisition, divestiture and consulting industries.

HARTFORD CAPITAL’s established relationships with prospective buyers assure the client’s introduction to these entities at the appropriate level of decision-making.  This helps insure both a rapid response and the protection of the client’s confidentiality.

Structuring, Negotiating and Closing

Structuring and negotiating are often the most complex and sensitive phases of the selling process.  The buyer and seller frequently have diverse financial objectives, in addition to strong emotional involvement, HARTFORD CAPITAL professionals have the experience and diligence required to keep the negotiations progressing no matter how complex or heated they become.

Acting as an intermediary during often-sensitive negotiations, HARTFORD CAPITAL can devise a structure to maximize stakeholder benefits within the tax, accounting and legal constraints of both the buyer and the seller.

Once a verbal agreement has been reached, HARTFORD CAPITAL translates this into a written letter of intent.  HARTFORD CAPITAL then continues to work with the lawyers and accountants to assure that the written definitive agreements and purchase contracts accurately reflect the terms of the verbal agreements and the written letter of intent, including such areas as, payment terms, management contracts, non-compete provisions and warranties.  In addition, HARTFORD CAPITAL assumes the overall responsibility for seeing that all details of the closing, including the buyers due diligence, proceed on a timely basis as per a planned calendar of deadlines.