BD and its Process 上海普之康版权所有 Copyright - China Primary Care Co. Ltd
BD and its Process
上海普之康版权所有 Copyright - China Primary Care Co. Ltd
What’s BD BD stands for Business Development
“I do biz dev.” BUT WHAT EXACTLY IS IT?
“BD is sales” some will say, concisely.
“BD is partnerships” others will say, vaguely.
“BD is hustling” the startup folks will say, evasively.
“Business development is the creation of long-term value for an organization from
customers, markets, and relationships” (the Grand Unified Theory of business
development)
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Generally, BD contains 2 kinds: “Organic” and “Inorganic”
Organic: to amplify sales, MKT, services
Inorganic: Mergers and Acquisitions
Single
Sales/MKT
Group
Sales/MKT
Tech. Coop.
Mfg. Coop.
Brand. Coop.
Equity
Invest.(strategic)
minority 100% 50% control
Acquisition
Organic Inorganic
BD Process
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Legal/
Contracts
Acquisition/
Integration
Deal timeline
Target Identification &Approach
Deal Structure
Negotiation Strategy
Deal Diligence
Valuation
Deal Structure
Target
Identification
& Approach
Negotiation
Strategy Process
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Company Analysis
Core
Competencies
Corporate
Vision
New Competences
needed for vision
What your
company brings to
the table
Environmental Analysis
Industry Analysis
Related Merger
Environment
Stock Market Reaction
External
Assessment
Your Company Fit/ Synergy
Cost Savings Revenue
Enhancement
Strategic Fit and Option
Value
your Company’s
Position/Synergy
Potential
Deal Pipeline
Entry Option Evaluation
Target Company
Identification
Clear Vision for deal
process & integration
Acquisition
Target(s)
Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
Target Identification & Approach
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• Define criteria to rank attractive segments/business
• Select best entry option (build, buy, JV, …)
• Research all existing/new players in the industry
• Condense your list to the most attractive targets
• Preliminary DD(financial/market model), select best
• Make contact, NDA and LOI(value assumption)
• Determine how the acquisition process occurs
• Also remember to develop alternative candidates
Target
Identification
& Approach
Deal
Structure
Target
Identification
& Approach
Deal
Structure
Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
Due Diligence
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Preparation Execution Closure
Pre-
due diligence
• Resources & logistics
• Form & prep team
• Learn/index data room
• Prepare data requests
• Define ownership
• Communication plan
• Confidentiality
On-site
due diligence
Post
due diligence
• Management presentation
• Relationship building
• Complete assessment
• Site visits/diligence
• Validate/revise
valuation assumptions
• Due diligence report
• Proforma fine tuning
• Contractual points
• Integration plan
Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
Valuation
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Comparables Valuation methods
• Evaluate target against other companies that operate in same or similar industries
• Key elements: Public company financials(Sales, EBIT, EBITDA), market valuations and change of control premiums
Discounted Cash Flow Valuation methods
• To capture discounted value of after tax cash flows generated by a business to understand the economics of a transaction
• Key elements: After tax cash flows from operations, weighted average cost of capital, terminal value and synergies/restructuring costs
Financial Statement Impact Valuation methods
• Evaluate impact of a transaction on your own company’s earnings/EPS/EBIT/operating Margin rate/goodwill
• Key elements: Your own earnings after new goodwill and interest cost, pre and post acquisition financial metrics
Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
When possible use all valuation methodologies … analyze value
from buyer and seller perspectives
Valuation objectives ... • Determine the appropriate range of acquisition values • Determine feasibility of the proposed transaction • Prepare for negotiations
Deal Structure
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Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
Asset Deal Deal Structure
• Forming new company with asset contribution
• Acquiring assets
• Assets swap
Equity Deal Deal Structure
• Acquiring equity of existing DE/SOE/FIE(including via capital expansion)
• Equity swap
• Merger
Combination of Equity&Asset Deal Deal Structure
• Mix of the two ways
Negotiation
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• Don’t Talk About Your Synergies
• Keep Open Some Issues You Can Lose
• Use Written Open Issue Tables to Clarify Disagreement
• Never Hesitate To Call for a Team Break
• Think Ahead to the Other Side’s Reaction to Your
Comments and Positions…Don’t Fall Into Traps
• Be Ready to “Walk Away” On Critical Issues
• Don’t Be Compelled to Be Logical All the Time
• Stay Rational and Keep Your Emotions In Check
Negotiation
Strategy
Deal Diligence
Valuation
Target
Identification
& Approach
Deal
Structure
Legal/Contracts
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Review Public
Data
Obtain Offering
Memo / Pitch
Book
Assess Strategic
“Fit”
Initial Contact
Confidentiality
Agreement
High Level
Information/
Discussions
Letter of Intent
(maybe)
Review of Confidential Information and Access to Target
Confirm Assumptions and Identify Red Flags
Timing Varies Greatly
Due Diligence Continues in Parallel
Sign and Announce
Begin Integration Planning
Obtain 3rd Party and Regulatory Consents
Close
Begin Integration and Compliance Training
First Opportunity to “Audit” Acquired Business
Better contracts will help to make deal clear, to protect more for you
and to avoid risks somehow
Evaluation Negotiations Post- Closing Preparation
Pre- Closing
Due
Diligence
Purchasing contracts
Acquisition Integration
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Origination Signing Closing Normal operations
Where the rubber meets the road
“Making the deal work” “Doing the deal”
Due diligence
Thank You!
谢谢!
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