The Transaction Process
1. Introductions
Business owners can contact us directly to determine if we are interested in acquiring their company or partnering with them to invest in and help grow their business. To see if Crux Capital might be a good fit for you, please refer to our Investment Criteria section. If both sides determine there is a potential for a partnership, then we proceed to Step Two.
2. Initial Review
Once we have determined that your business meets our investment criteria and you have determined that Crux Capital could be a good fit for your objectives, we will exchange a Confidentiality Agreement which allows you to share the following information with us:
- Summary of the business owner’s needs (outright sale, recapitalization or partial sale, management buyout, etc.)
- 3–5 years of financial results (P&L and balance sheet)
- Review of annual benefits received by the owners
- Summary of top customers
- Other information that is particularly relevant based on the type of business (for example, annual capital expenditures in a capital-intensive business)
After reviewing this information and a follow-up telephone conversation, we will either confirm our interest and discuss next steps or politely decline. If we move ahead, Crux Capital will typically issue a term sheet and arrange an on-site visit.
3. Term Sheet to Letter of Intent
After a successful visit, the process becomes more involved and formal. Additional information is exchanged, and another site visit may take place. As Crux Capital continues to learn about your business, and you learn more about us, further discussions regarding company valuation and transaction structure occur. The term sheet from Step 2 may be revised multiple times during this stage and, eventually, lead to a formal Letter of Intent.
A Letter of Intent, or “LOI”, is a formal, written document indicating the terms a buyer is offering a seller in a proposed acquisition or investment. A LOI states a serious intent, by both parties, to carry out the proposed transaction. Crux Capital is very selective about issuing LOIs because they indicate that we will be dedicating substantial resources to acquiring your business under the terms outlined in the LOI.
4. Letter of Intent to Closing
Due diligence is a rigorous 90-day review of the business and includes a detailed analysis of accounting history and practices, operating practices, customer and supplier references, management references and market reviews. The due diligence process is managed by a Crux Capital partner with the assistance of third party advisers such as accountants.
Crux Capital and its limited partners provide the equity capital to complete acquisitions, but we will also use some form of debt financing. The debt financing process includes identifying lenders interested in partnering with Crux Capital to complete the acquisition. Crux Capital maintains a large network of lenders that we can partner with to complete acquisitions.
The final step in the acquisition process is the legal documentation and funding step. Upon completion of the legal process, the acquisition funds are wired to the seller and the acquisition is complete. When the deal is finally done, we can celebrate the beginning of our mutually beneficial and profitable future together.