Page 29 - SONEPAR 2021 - AcquisitionBook

PHASE 1:
STRATEGIC ANALYSIS
4.4
PHASE 2:
EXPLORATORY PHASE
PHASE 3:
LETTER OF INTENT
PHASE 4:
DUE DILIGENCE
PHASE 5:
SALE & PURCHASE AGREEMENT
PHASE 6:
CLOSING
PHASE 7:
INTEGRATION & FOLLOW-UP
COMPLETE THE DUE DILIGENCE
Once the DUE DILIGENCE has been performed, the potential purchaser will be able to consider different options which may be:
➜ walk away from the deal – if the risks associated with the target’s business are deemed too high (e.g. significant financial, tax or compliance issues);
➜ confirm or reduce the proposed purchase price;
➜ identify problems that will have to be remedied during the integration process;
➜ calibrate the terms and conditions of the SPA (e.g. REPRESENTATIONS & WARRANTIES and/or INDEMNITIES);
➜ adapt and improve the deal and the price structure.
Results of the DUE DILIGENCE will thus greatly contribute to the
final shaping of the deal.
4.5 OBTAIN FINAL INVESTMENT COMMITTEE APPROVAL 4
Obtain final INVESTMENT COMMITTEE approval
Following the DUE DILIGENCE, the updated ACQUISITION SHEET and BUSINESS CASE shall be submitted, with the Regional President’s prior review and approval, to the HQ M&A team for further review.
A DUE DILIGENCE Red Flag Report shall be included in the BUSINESS CASE to point out the high- risk items identified and specify the mitigation plan to solve these items ideally prior to the signing of the SPA (actions to be performed by the seller) or as part of the SPA contents (e.g. seller’s undertakings between signing and CLOSING, REPRESENTATIONS & WARRANTIES, INDEMNITIES, etc.) or after CLOSING as part of the integration plan.
Once completed, the HQ M&A team will forward it to the INVESTMENT COMMITTEE for a final “GO” or “NO GO” decision prior to drafting the SPA.
TO KEEP IN MIND
➜ DUE DILIGENCE allows to understand the target company’s value and risk profile based on detailed information.
➜ At this stage, the purchase price and other main terms and conditions can be amended, and the deal can even be abandoned.
➜ The outcome of the DUE DILIGENCE (whether favorable or unfavorable) must be reported in the BUSINESS CASE for final approval (Appendix 13).
➜ The ACQUISITION SHEET must be updated to have the final valuation.
➜ The documentation will be reviewed by the INVESTMENT COMMITTEE to make a final GO/NO GO decision.
SONEPAR - ACQUISITION MANUAL - 2021 - FOR INTERNAL USE ONLY 27