The mergers and acquisitions process is oftentimes associated with long, drawn-out legal negotiations and complex financial arrangements. At HMG Capital, we’ve developed systems to streamline the process and remove much of the hassle and annoyances associated with buying and selling a business.
By laser-focusing our efforts on companies we believe from the very start will be a good match our goal is always to make the M&A process an enjoyable and profitable experience for everyone involved.
To accomplish our goals (and yours), we have built a very straightforward and effective process that guides every single acquisition we make as a company.
The Initial M&A Discussion
After our M&A team finds a business we believe is doing an amazing job but still has potential to grow, we schedule an initial call to learn more about your business.
This initial call serves two purposes. First, it allows us to tell potential sellers about HMG Capital. We explain how we got started, what we’re doing now, and what we can offer as the new owners of your business.
Second, we learn more about the business a potential acquisition partner is running. This initial call is based around gaining a high-level understanding of the business’ operations, including high-level numbers that we can dive into at another time.
If we believe there’s potential for an acquisition, we also explain how the HMG Capital M&A process works. This final step ensures that someone interested in selling their business isn’t met with surprises as we move towards acquiring their operations.
Here’s a breakdown of what our M&A process offers to potential partners:
- A simple and transparent purchasing/investment process.
- Opportunity for owners to stay on or walk away.
- All cash offers.
- Quick closes.
- We plan to hold our acquisitions for the long term.
- We don’t mess with staffing, company culture, or operating rhythms.
What we bring to the table after the acquisition:
- An experienced team of 80+ staff across three offices.
- Strong relationships with distribution and monetization partners.
- Strong funding in place.
- Experience buying publishing businesses.
- Synergies across our existing businesses.
- In-house content teams.
- An in-house video team.
Next Steps: Signing An NDA And Access To Information
If our initial call has piqued your curiosity and you’re interested in potentially selling your business, the next step involves signing an NDA (non-disclosure agreement). This agreement ensures that we can speak freely with you about your business and ours.
After the NDA has been signed our dedicated M&A team will begin to collect the necessary information to evaluate the business.
The start of our data collecting business is straightforward with our team requesting some base-level documentation.
Our initial data collection includes:
- Access to Google Analytics and Google Search Console.
- Monthly P&L for the past 2-3 years.
- Revenue partner exports for website ads (showing monthly impressions) for associated years.
Google Analytics and Google Search Console provide non-admin access options, making that step in the process a simple but effective tool to help us valuate a business.
Detailed Questions Follow-Up (One Week Later)
Our experience in the mergers and acquisitions space has allowed us to create processes for initial evaluation that can be completed in just one-weeks time. Once we’ve received the information listed above, we’ll reach out within seven days to ask more detailed questions about a business’s overall operations.
Based on our initial analysis, we will send over a PDF that contains specific questions about the business. These questions focus on five main areas.
- Operations
- Staffing
- Technology
- Social Media & Distribution
- Details on other assets and initiatives
If we’re satisfied with all of the answers to your questions, no further follow-up questions will be required. If there are still outstanding questions, our team will ask to set up a quick follow-up call. This call is used simply to clarify your answers to ensure we fully understand your business’ operations.
The Offer (After Only 2 Weeks)
As initially noted, we don’t believe in dragging the M&A process along for months. For that reason, we strive to make business owners an offer within two weeks from the time we receive initial information about the business.
If we believe your business is a great fit for HMG Capital, we’ll tell you exactly what we’re willing to offer you in exchange for the transfer.
The Letter Of Intent (LOI)
When we’ve agreed on a buy price we’ll send a letter of intent. This letter states that we’ve agreed on terms of the sale and that we intend to buy your business. This is not the final agreement but rather a notice of intent to acquire the business.
There will be a few final steps before an official purchase agreement is signed and the transfer of ownership of the business is finalized.
The Due Diligence Process (1-2 Weeks)
When the letter of intent is in-hand we’ll begin the due diligence process required to finalize the sale of the business.
This process involves connecting the current company owner with the stakeholders at our company who handle each aspect of operations. This includes our content and social teams, engineering, revenue, and operations departments.
Our team specific leaders gather the necessary information to verify all aspects of the business. This is where our teammates take a much deeper dive into the initial data you provided to us at the start of our talks.
The Purchase Agreement Is Ready
If we’ve reached this portion of the M&A process it means we love the business and we’re sure it will make a great fit within our corporate culture. With the LOI already signed and verification of your business now completed, we will offer a purchase agreement.
Unlike the letter of intent, the purchase agreement is the legally binding agreement between HMG Capital and the business we are acquiring.
The purchase agreement in clear terms explains what we are paying for your business and what we will receive in return. It also outlines timelines for the transfer of ownership, along with all other considerations discussed during our initial calls.
Our purchase agreements vary slightly from one business to another based on various factors. We aim to provide for a clear and concise purchase agreement.
Closing Out The Deal: Payment And Transfer
Once the purchase agreement is signed we place the money owed to the business inside an Escrow.com account. This ensures that the finalized transfer is completed before Escrow.com will release the funds. This is a standard practice in our industry and one that is trusted by brokerage firms from around the world.
With the purchase now funded, we will schedule times with our integration team to transfer all of your business assets to HMG Capital.
Once the transfer is finalized, the funds held in Escrow are released and the M&A process draws to a close.
A Final Note
While the M&A process will be completed at this point the fun for us has just begun. We have spent years building an amazing company culture and now it’s time to bring our new employees into the fold.
In the back of our mind is always one constant thought. If the original owner of a web property looks back at what we’ve done with the website, would they still be proud to call themselves the founder?