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PHASE 2: EXPLORATORY PHASE
Sign a CONFIDENTIALITY AGREEMENT
Once a suitable target has been identified and initial discussions demonstrate a common interest for the transaction, the M&A project can be formally launched. This phase will be basically dedicated to building a first BUSINESS CASE and financial valuation for submission to the INVESTMENT COMMITTEE.
It can be divided into the following 4 main steps.
2.1 SIGN A CONFIDENTIALITY AGREEMENT
The signature of a CONFIDENTIALITY AGREEMENT (also frequently named non-disclosure agreement, or NDA) will allow SONEPAR to start collecting internal information about the target company. A CONFIDENTIALITY AGREEMENT template is available in Appendix 3.
Special attention must be paid when a non-solicitation clause (or non-hiring clause) is inserted in the CONFIDENTIALITY AGREEMENT by the seller. This kind of clause shall be avoided as much as possible as they prevent SONEPAR from hiring employees of the target company. If not possible, their duration and scope shall be as narrow as possible (not exceeding 2 years, with only direct solicitations covered).
The confidentiality obligations set out in a CONFIDENTIALITY AGREEMENT shall normally be limited to 2 or 3 years.
M&A transactions of a significant size shall lead to the execution by all SONEPAR team members of a specific, internal confidentiality undertaking. This is strictly mandatory in case a company listed on a stock exchange is involved in the transaction.
2.2
UPDATE THE SONEPAR ACQUISITION BASE
All considered acquisition projects must be communicated to the HQ M&A team and uploaded in the SONEPAR ACQUISITION BASE as soon as CONFIDENTIALITY AGREEMENTS are signed. A copy thereof must be sent to the HQ M&A team.
This template shall be used and adapted based on local regulations and practices. CONFIDENTIALITY AGREEMENTS must be reviewed by the Region or Country’s Legal Department. They do not need to be reviewed by the HQ Legal team, unless specific issues arise (e.g. where the target is a listed company). Binding commitments other than related to confidentiality of shared documents and information shall be avoided at this stage of the M&A process.
The SONEPAR ACQUISITION BASE must be updated on a regular basis as the acquisition progresses.
2.3 PREPARE A BUSINESS CASE AND AN ACQUISITION SHEET At this stage, the objective is to start building a BUSINESS CASE containing key information on the target and prepare a first valuation of
the target using the ACQUISITION SHEET.
This BUSINESS CASE (Appendix 5) and the ACQUISITION SHEET (Appendix 6) will be used to make a first decision (“GO”/“NO GO”) on the
potential transaction by the INVESTMENT COMMITTEE.
12 SONEPAR - ACQUISITION MANUAL - 2021 - FOR INTERNAL USE ONLY www.sonepar.com