The Cogent Approach
Cogent Growth Partners’ philosophy is that we succeed only by helping our clients and candidates achieve demontrable results for both sides that support their respective long-term goals. Our unique approach – combining specialized M&A know-how with deep IT Services operational expertise throughout our staff – allows us to help our clients and the candidate companies in a variety of ways that most firms simply can't understand. Because we are buy-side only, and do no sell-side representation at all, we are dedicated to working with our clients for the long haul, which means we are devoted to helping both our clients and the candidate companies, realize their potential profitability in the near term and over time.
The Cogent Transaction Lifecycle is the roadmap (which is repeatable, time after time)
· Assessment & Preparation
· Identify & Recruit Acquisition Candidates
· Negotiate & Close The Transaction
· Integration & Cost Consolidation
· Normalize & Repeat
Assessment & Preparation
We help position our clients for success by assessing if they are financially and operationally sound enough to be an effective acquirer, before we work to create the initial criteria for the first acquisition. We begin by analyzing our clients’ financial information and perform an opertional assessment, working with thm to understand their business from the inside out. This helps us discover criteria requirements and complementary structure concepts that form the basis of our acquisition thesis. Once in place we can refine our general research to be specific to the then current thesis, and as it evolves over time after each transaction, we are able to modify activities to suit.
The financial analysis also lets us understand costs associated with the client’s general operations. This is a component of our operational analysis, where we compare our client’s business to industry Best Practices across a variety of functions, including marketing, sales, service delivery, HR, etc. The result of this analysis is a list of short and long-term recommendations for operational optimization. This analysis also allows us to help our client establish a financial growth plan and help the client devise an ultimate exit strategy. It also prepares us to “tell our client’s story” as we engage potential acquisition candidates.
Identify & Recruit Acquisition Candidates
While we are "on-boarding" a client the Outreach team is busy gathering a likely suspect list from our general database that we can then cull and augment once we have completed the criteria for our client company. At that point we are well prepared to begin contacting suspected candidates. Our market research and outreach efforts are very discreet and focused on initial identification and operational profiling through available sources. Leveraging our operational expertise, we are able to identify likley candidates from this information, before we approach them.
Once identified, the Outreach team contacts the owner of the candidate company, attempting to set a discovery call with one of the Cogent partners on the Deal team. If that meeting goes well, and there is interest in follow-on discussion, we schedule an "Operational review" call with the Business Analysis team, so that we can have sufficent material to create and "Opportunity brief" for our client. Once the client agrees that the prospective candidate is a likely transaction opportunity, we work with the parties to set the first meeting between them, to ensure there is a "spark" of reciprocal desire to move forward. If so, we request an initial diligence package from the candidate, and push discussions forward based on what is discovered during the initial due diligence period.
Negotiate & Close the Transaction
If the client and the candidate company are in basic agreement with regard to general structure and price guidelines communicated the initial due diligence phase, "in-the-ballpark" as it is said, we will continue the diligence process in earnest and work with the parties to craft a viable written offer. Once fully negotiated and all parties understand the financial and operational implications of the deal and its structure, we submit the final Letter of Intent (LOI) to the parties for signature, signifying that all are ready to move forward with the transaction and take the time and effort required to bring the transaction to closing. This is usually a six to ten week process, but it can go faster or take longer, depending on circumstances.
As the transaction proceeds post-LOI, Cogent will be on point, authoring all the transaction paperwork, gathering and processing all remaining financial and operational due diligence material, while also keeping all parties on track and moving forward. Importantly, we do most all of the heavy lifting in this phase so the parties can focus on running their business. Clients remain responsible to use our diligence to do their own due diligence, which will be a much easier lift and decision making process as much of the work has been done by Cogent.
Cogent takes the lead with legal counsel from both sides. They represent the parties directly as their counsel, but we author the bulk of the transaction documentation, schedules and supporting material, so counsel is better able to be a trusted advisor and help each side review and approve the material as needed; often saving both sides a lot of money in professional fees generally. We will work with both sides to finalize all due diligence, the transaction documentation, financial modeling materials, integration planning materails, and all the other work that leads to successful closing. We'll even prepare and run the closing to be sure it goes as smooth as practical.
Integration Planning & Implementation
Throughout post-LOI due diligence phase, while we are creating all of the transaction documentatin, our project management process helps us cooperatively build and refine the integration plan so that all the partes can be well prepared to execute and manage operational and financial integration beginning on the day of closing. As a result of our transaction experience and IT Service operational expertise, we are able to help the parties thoughtfully evaluate prepeare the integration plan well before the deal closes. The core concept of integration planning is to help ensure a smooth, orderly, and predictable transition, with as few surprises as practical. It will never be perfect, or go flawlessly, but the approach mitigates a fair amount of risk for both sides, while at the same time helping ensure that the core business remains as stable as possible throughout the post-closing integration time frame.
Normalize & Repeat
When the dust has settled and integration is fairly complete the consolidated business simply becomes “the business.” At that point the business should be well positioned to leverage its new scale, further optimization opportunities and pursue incremental organic growth. As the business begins to accrue the benefits from free cash flow, once again we turn our attention to acquisition opportunities. Thus, the Cogent Transaction Lifecycle begins anew.