The Process
The Acquisition & Divestiture Processes
The Tidewater Group follows the classic methodology in assisting clients in the acquisition or divestiture process. This methodology is outlined below. In either process the Company makes use of its extensive databases. The Databases and the Processes are outlined below:
A. Databases
B. The Acquisition Process
C. The Divestiture Process
B. The Acquisition Process
C. The Divestiture Process
Databases
The Tidewater Group maintains extensive databases with over 35,000 companies in the food processing, distributing and importing segments of the food industry. Our databases are kept up-to-date with information on products, size, location, key contacts and interests. As a result, we are able to conduct acquisition and divestiture services quickly, quietly and efficiently. These Databases enable the Tidewater Group to identify companies on a nationwide basis that are beyond the list of competitors in the clients’ region. In many instances, we can also supply the client with sales, product lines and other information on the potential target. Thus, even before the initial contact is contemplated, the client has some knowledge of the target. The Tidewater Group will use its own databases and others, to provide clients with a broad range of firms that could be considered prospective targets. Some of these databases are:
| Acquisition Pricing | Grocery |
| Baked goods | Importers |
| Beverage | Meats |
| Buyers | Natural-Personal Care |
| Canned, Jar & Frozen Vegetables | Natural-Food Natural/Organic |
| Catalogue | Oils |
| Cereal | Pasta |
| Chicken & Poultry | Packaging-Food & Gift |
| Coffee | Poultry & Game |
| Confectionery | Produce |
| Dairy, Deli, Cheese | Seafood |
| Distributor | Snacks |
| Dry Foods, Mixes & Ingredients | Specialty/Gourmet |
| Ethnic Foods | Venture Capital |
| Entrees & Sides (SS) | Wet Sauces |
| Frozen-Dessert/Appetizers | |
| Frozen-Entrees/Sides | |
The Acquisition Process
The Tidewater Group is a small, private Investment Banking firm, representing a variety of clients in all segments of the food industry – in which we specialize. Since our focus is very narrow, we have developed an extensive list of relationships. Over the past nineteen years, we have been given tours of plants and offices, or enjoyed lunch and dinner with many of the key owners/officers in the food industry. In addition, “The Group” has been asked to provide several associations (NASFT, SCAA, NCA) with seminars on the acquisition and divestiture process. This network of former associates, business contacts, association members, and friends stay in touch on a routine basis. Consequently, phone calls are returned and owners/senior managers are willing to listen to potential opportunities.The Tidewater Group’s objective is to provide our clients, that are interested in acquiring companies – the ability to do so, while never losing focus on their business. It also provides those clients interested in selling their companies/divisions – the ability to move forward during the sale process, with minimal disruption to their organization.
CORPORATE ACQUISITIONS:
To assist clients that include acquisitions in their strategic plan, the Tidewater Group employs the classic Merger & Acquisition search and marketing approach. The process begins with the clients’ criteria and ends with the acceptance of the proposal by an acquisition target. Throughout the process, the client is involved to the extent they desire–with most clients this is limited to a weekly update and their suggestions as to additional targets to be added to the list. The M & A methodology has been utilized and perfected by the large Investment Banking firms that specialize in the Fortune 500 corporations. We have adopted this method because of our long-term experience and success with it, and believe this method will provide our clients with the best opportunity to achieve their objectives in the acquisition process. A brief explanation of the process may be helpful:
THE PROCESS: Commences with the Tidewater Group developing an understanding of the client’s strategic objectives in regard to prospective acquisitions. This listing of criteria will enable “The Group” to conduct an effective and focused database search that will produce targets most likely to meet the client’s objectives. During this process, it will also be important to understand the client’s business and the financial structure the client will most likely propose to conclude the transaction. The services performed will include:
CLIENT CRITERIA: Working with the Client, the Tidewater Group will list the search criteria most likely to identify targets that meet the client’s objectives. These criteria will include such factors as the market segment (grocery, specialty, industrial, food service, etc.), product category (frozen, refrigerated, dry, ingredients, bakery, etc), products produced, company size (sales), profitability/or turnaround, methods of distribution, manufacturer or marketer (products are co-packed), etc.
CONFIDENTIALITY AGREEMENT: Will be developed for the client to sign in the event the target does not have one they insist on using. This Confidentiality Agreement will also be signed by The Tidewater Group before receiving any information on the client.
CLIENT INFORMATION: In order to make an intelligent presentation to the proposed target, we will need information on the clients’ size and financial position. If the client is a food processor, products produced, markets served, product category, and other information would be helpful. Most of this information can be obtained from a catalog, price list, product slicks and other standard marketing information. If the client is a financial investor, an executive desirous of owning their own company, or venture capital firm, then information on their financial position is required. No financial information on the client will be divulged, without prior discussion and agreement.
THE SEARCH: Since we operate on a national basis in the food industry, we will review our database for the corporations that most closely fit the criteria that have been identified. In addition, we will add any companies that a client would like to include in the list of target opportunities. We will work to bring the top candidates to the table.
THE SEARCH: Since we operate on a national basis in the food industry, we will review our database for the corporations that most closely fit the criteria that have been identified. In addition, we will add any companies that a client would like to include in the list of target opportunities. We will work to bring the top candidates to the table.
ACQUISITION PRICING: The Tidewater Group will bring information and advice to the relationship. This will include information on deal pricing in the food industry with examples of recent acquisitions including, the purchase price, deal structure, contingencies and other important aspects of successful transactions. This enables our clients to understand the market and structure their proposal to meet the minimum level required to be seriously considered by the seller.
TARGET VALUATION: The Tidewater Group will assist the client in valuing the target company, using a variety of methods. We will use sales, gross profit, operating profit, EBITDA, net asset value and other ratios and multiples, as appropriate for each company. In addition, “The Group” will also assist the client in a “present value” analysis of future cash flows in order to place a value on the Target Company. These valuations are a key element in the development of a strategy for making an offer.
DEAL STRUCTURE: We will provide the client with feedback from the target and advise on pricing and structure so the client can structure the transaction to their best possible advantage. We will further assist the client, if requested in drafting the Letter of Intent.
DEAL STRUCTURE: We will provide the client with feedback from the target and advise on pricing and structure so the client can structure the transaction to their best possible advantage. We will further assist the client, if requested in drafting the Letter of Intent.
DUE DILIGENCE: If requested, we will provide guidance and direction during the due diligence process including a due diligence check list, suggestions on what information to request, what people to interview, and generally assist throughout the process.
CLOSING PROCESS: We will assist the client in the management of the process to make it as smooth, stress-free and successful as possible.
CLOSING PROCESS: We will assist the client in the management of the process to make it as smooth, stress-free and successful as possible.
THE ENGAGEMENT AGREEMENT:
The Tidewater Group typically works for clients based on an Engagement Agreement. The Agreement will spell out what services will be performed and the costs associated with them. There are three types of relationships: Retained Search; Transaction Search and Buyers Alert.
RETAINED SEARCH: Used by individuals, venture capital firms and corporations seeking growth through acquisition. This relationship serves their desire for a significant focused and concentrated search for companies/brands that fit their criteria. The extensive campaign to parties that express an initial interest should bring as many targets to the selection pool as possible. A weekly phone report and a monthly written report is included in the retainer fee. The fee is determined by the scope of the project. See: Fee Agreement.
TRANSACTION SEARCH: The full search process is employed as above, but is not necessarily daily in intensity. In addition, weekly updates are provided by phone but monthly written reports are not provided. See: Fee Agreement.
BUYERS ALERT: This is a more passive type of relationship. When a client of the Tidewater Group that is interested in selling matches the interests of the prospective acquirer, they will be mailed a letter. In this way you will be kept abreast of companies for sale that are in the buyer’s general category.
TRANSACTION SEARCH: The full search process is employed as above, but is not necessarily daily in intensity. In addition, weekly updates are provided by phone but monthly written reports are not provided. See: Fee Agreement.
BUYERS ALERT: This is a more passive type of relationship. When a client of the Tidewater Group that is interested in selling matches the interests of the prospective acquirer, they will be mailed a letter. In this way you will be kept abreast of companies for sale that are in the buyer’s general category.
COSTS AND FEES:
RETAINED SEARCH & TRANSACTION SEARCH
RETAINED SEARCH: Costs and fees are detailed in an Engagement Agreement. The amount of the retainer is determined by the scope of the project.
TRANSACTION FEE: Paid when the transaction closes. It is based upon a percentage of the selling price (see Engagement Agreement).
OUT-OF-POCKET EXPENSES: These expenses include the costs of the database search, typing, mailing, telephone and other costs associated with the search. They are billed and payable on a monthly basis.
TRAVEL & OTHER EXPENSES: Those expenses over and above out-of-pocket costs that are requested by the client or agreed to in advance, such as plant visits, visits for strategy sessions, or other items of significant cost. These expenses are also billed and payable monthly.
TRANSACTION FEE: Paid when the transaction closes. It is based upon a percentage of the selling price (see Engagement Agreement).
OUT-OF-POCKET EXPENSES: These expenses include the costs of the database search, typing, mailing, telephone and other costs associated with the search. They are billed and payable on a monthly basis.
TRAVEL & OTHER EXPENSES: Those expenses over and above out-of-pocket costs that are requested by the client or agreed to in advance, such as plant visits, visits for strategy sessions, or other items of significant cost. These expenses are also billed and payable monthly.
BUYERS ALERT: In this relationship, the fees are paid by the seller unless the buyer requests special services.
The Tidewater Group would enjoy working with you to achieve your objectives. “The Group” works on a national basis – and is solely focused on the food industry. As a result, we believe we can identify prospective acquisition targets, advise you on market pricing practices and deal structures in an efficient and cost-effective way. In addition, since the time consuming search, to identify a broad number of potential targets is performed by Tidewater Group, the disruption of your business will be greatly reduced. We will work closely with you throughout the entire period so that you are comfortable with the process and the final result.
The Divestiture Process
The Tidewater Group is a small, private Investment Banking firm, representing a variety of clients in all segments of the food industry – in which we specialize. Since our focus is very narrow we have developed an extensive list of relationships. Over the past nineteen years, we have been given tours of plants and offices, or enjoyed lunch and dinner with many of the key owners/officers in the food industry. In addition, “The Group” has been asked to provide several associations (such as NASFT) with seminars on the acquisition and divestiture process. This network of former associates, business contacts, association members, and friends stay in touch on a routine basis. As a result, phone calls are returned and owners/senior managers are willing to listen to potential opportunities.The Tidewater Group’s objective is to provide those clients interested in selling their companies/divisions/product lines – the ability to move forward during the sale process, with minimal disruption to their organization.
INVESTMENT & DIVESTITURE:
The Tidewater Group employs the classic marketing approach to assist our clients in maximizing value for their company. This methodology has been utilized and perfected by the large Investment Banking firms that specialize in Fortune 500 corporations. We believe that this method will identify those corporations and individuals that will provide our clients with the best opportunity to achieve their objectives for value, and other shareholder concerns. A brief explanation of the process may be helpful. Tidewater uses the same methodology to seek investors as it does to seek potential acquirers. As a result, the following applies to both types of searches.
THE MARKETING PROCESS Commences with a corporate valuation and continues until the final closing. The services performed will include:
THE MARKETING PROCESS Commences with a corporate valuation and continues until the final closing. The services performed will include:
CORPORATE VALUATION: Provides a price range you could expect to receive from selling the company in today’s market. We will use a variety of methods to arrive at the projected range.
CONFIDENTIALITY AGREEMENT: Will be developed for prospective acquirers to sign prior to receiving information on the company.
CONFIDENTIAL BUSINESS REVIEW: The CBR will provide prospective acquirers with the information required to make a decision. It will include:
NEGOTIATION: We will negotiate or assist in the negotiations as directed by our client. We will work side by side with our client to make sure they get the best value for their company.
DUE DILIGENCE: We will provide guidance and direction to you during the due diligence process including, what to expect, what information and people to have available.
CLOSING PROCESS: We will manage the process to make it as smooth and stress-free as possible.
CONFIDENTIALITY AGREEMENT: Will be developed for prospective acquirers to sign prior to receiving information on the company.
CONFIDENTIAL BUSINESS REVIEW: The CBR will provide prospective acquirers with the information required to make a decision. It will include:
- A company history
- Listing of the product lines and pricing
- Description of existing facilities
- Description of sales strategy, (grocery, specialty, natural, food service, industrial, mail order, etc.) and whether sold by a distributor, handled by a broker or sold direct
- Recent financial statements (preferably 3 years, with the last year restated to put above average owner compensation & perks back into income)
NEGOTIATION: We will negotiate or assist in the negotiations as directed by our client. We will work side by side with our client to make sure they get the best value for their company.
DUE DILIGENCE: We will provide guidance and direction to you during the due diligence process including, what to expect, what information and people to have available.
CLOSING PROCESS: We will manage the process to make it as smooth and stress-free as possible.
THE ENGAGEMENT AGREEMENT:
The Tidewater Group typically works for clients based on an Engagement Agreement. The Agreement will spell out what services will be performed and the costs associated with them. The amount of time it takes to successfully conclude a transaction varies but usually runs six to nine months – some go more quickly, some take longer, but a six to nine month average is not unusual.
COSTS AND FEES:
- Company Valuation: Costs depend on the size and complexity of the client’s company. (See Engagement Agreement)
- Transaction fee: Paid when the transaction closes. It is based upon a percentage of the selling price (see Engagement Agreement).
- Out-of-Pocket Expenses: Out-of-pocket costs are billed and are payable monthly. Costs include: postage, copying, express mail, typing, collating, binding, etc. Other expenses include those requested by the seller, such as plant visits, or other items of significant cost not normally included in standard out-of-pocket expenses.
- Office, Plant & Facilities: When there are physical facilities available for sale with the business the Tidewater Group will make every effort to have the buyer of the business, also acquire the facilities. Tidewater Group’s effort to sell the physical facilities will be limited to those organizations interested in acquiring the business. If the buyer of the business acquires the physical plant, a fee will be due Tidewater Group for the sale of the facilities (See Engagement Agreement).
INVESTORS: Under some circumstances it is possible to interest venture capital or private investors in small food companies. When this is the objective, Tidewater will use its databases to attempt to identify these companies or individuals. Generally, the same methodology and fee structure which are used in an acquisition are used in a divesititure.
LICENSE ARRANGEMENTS: Some companies desire to generate an income stream based upon their reputation (restaurants and significant brands) while not being in the production and/or distribution business. We work with these clients, to value their products and determine an appropriate royalty rate for a license. We then work with prospective acquirers to assist them in understanding the value already developed with the existing product sales and the opportunity that is present in the license arrangement for the brand.
LICENSE ARRANGEMENTS: Some companies desire to generate an income stream based upon their reputation (restaurants and significant brands) while not being in the production and/or distribution business. We work with these clients, to value their products and determine an appropriate royalty rate for a license. We then work with prospective acquirers to assist them in understanding the value already developed with the existing product sales and the opportunity that is present in the license arrangement for the brand.
The Tidewater Group would enjoy working with you to achieve your objectives. Since “The Group” works on a national basis – and is solely focused on the food industry – we believe we can achieve the best value, for your company in today’s market. In addition, because of our pre-qualifying work, the disruption of your business will be greatly reduced. We will work closely with you throughout the entire period so that you are comfortable with the process and the final result.
