The Acquisition Process

1. At the beginning of the acquisition process, a strictly confidential meeting between a buyer and a seller takes place
   
   
   • Seller and buyer sign a confidentiality agreement
   • Typically, the seller will describe the company and provide some summary financial data. Buyer and seller may also discuss and compare their preliminary views on the sale and acquisition price in order to assess whether it makes sense to engage in further steps of the acquisition process.
   • If deemed sensible, a tentative time-line for the first phase of due diligence is agreed between the parties. Such preliminary due diligence will typically be carried out by the potential buyer together with its appointed external consultants, lawyers, CPAs, tax accountants and other advisors.



2. The preliminary due diligence will typically not take place at the companies premises in order to avoid causing any disruptions to the ongoing business and to assure confidentiality of the process. In this phase, a first sighting and audit of documentation will frequently take place:
   
   
   • Finance (Budgets, Forecasts / Business Plans, Consolidated Financial Accounts as well as internal cost accounting information and management reports of the past three to five years...)
   • Legal (Copies of articles of incorporation, by-laws or other constitutional documents, major contracts, documentation of patents and trademarks)
   • Taxation
   • Market / Products / Sales- and Marketing Structure
   • Suppliers
   • Production / Maintenance / Assets / Capital expenditures
   • Research & Development
   • Organisation / Personnel / Pension liabilities
   • Information Technology
   • Environmental, Safety and Health aspects
   • Contingent liabilities
   • Market / Industry Regulation, if applicable
   • Etc.
   This phase will typically last two to six weeks, but it can vary and sometimes be shorter or much longer. During this period, a number of meetings with the owner-manager / selling shareholders will be conducted in order to better understand the company. It may also be discussed, whether and for how long the selling owner-manager is interested and prepared to stay on board to contribute his knowledge and experience (as a manager, member of the supervisory board or consultant).
   
   In most cases, there will be a tour of production facilities.



3. If the result of the first phase of the due diligence is satisfactory, Wieland Capital will, in a written, non-binding "letter of intent"; communicate its interest to acquire the company. Such a letter will typically entail:
   
   
   • An indicative range for the purchase price, subject, e.g. to further, confirmatory due diligence
   • A timetable for the further process
   • Demand for a period of exclusivity, potentially also an agreement regarding cost coverage and/or a break-up fee;



4. If the non-binding offer is met with interest by the potential seller, the second phase, the confirmatory due diligence begins, potentially following the conclusion of an agreement on a phase of exclusivity and / or a "break-fee"; this phase may last from a few days to several weeks.
   
   
   • The information and areas that were reviewed in the preliminary due diligence will be analysed in more depth
   • Potentially, key employees will be informed of the sale process and interviewed

If the confirmatory due diligence is successful, negotiations will be conducted regarding the purchase price and a sale-and-purchase agreement (SPA) and other agreements, which will typically contain representations and warranties, and may sometimes still be subject to certain closing conditions. If the parties come to an agreement, the SPA will be signed and usually notarized.