Every transaction involves two distinct perspectives: that of the seller and that of the buyer. In the context of transactions in the financial market, it is common to use the English terms “sell side” and “buy side”. Let’s analyze the two sides of a mergers and acquisitions (M&A) operation from both perspectives, whether buying or selling.
Sell side: the seller’s side
The Sell-Side consists of companies that are for sale, whether partially or fully, including startups, among others. Sell-Side” represents the part of mergers and acquisitions (M&A) operations that seeks to raise resources or capital through third parties.
This side encompasses everyone involved on the selling side of an M&A transaction. Some institutions may play roles in this aspect of operations:
- Company, Entrepreneurs and Employees: due to the need for confidentiality, only a restricted number of people have knowledge and active participation in the operation. This includes entrepreneurs (partners) and possibly directors or high-level executives;
- Investors and Advisors: these are interested parties in the company’s activities who can not only assist in negotiations, but also exert significant influence on the decisions made;</li >
- Lawyers: they play a fundamental role in evaluating the conditions of the agreement (Deal) and are responsible for collecting much of the necessary documentation during the Due Diligence phase;
- M&A Advisory: specialists in mergers and acquisitions who guide all stages of the process. They lead negotiations with potential buyers and work to maximize the value of the deal and improve the terms of the agreement;
- Accountants and Financial Department: their main function is to provide financial and accounting information throughout the process, contributing to the detailed analysis of the company’s finances during Due Diligence.
Buy side: the buyer’s side
On the “buy-side” side, we find organizations, professionals and investors, whether individual or in groups, who show interest, with capital available to acquire other companies or startups.
This can be motivated by the desire for growth, access to new markets, technologies, acquisition of qualified labor, among other objectives. Here are the agents involved in this aspect of M&A transactions:
- Company, Entrepreneurs and Collaborators: similar to the “sell-side,” there are individuals who are part of the team in charge of conducting the acquisition operation. In mature companies with a history of acquisitions, there may be a specific area dedicated to Corporate Venture or M&A, which leads these transactions. Again, only a limited number of people are involved, including partners, directors and senior executives, in addition to the M&A team.
- Investors and Advisors: your expectations regarding the business influence the process, and, in some situations, the transaction may require your approval to be completed; li>
- Lawyers and Auditors: play a crucial role in analyzing the transaction. Its main responsibility is to mitigate risks and structure the operation from legal, accounting and tax perspectives;
- M&A Advisory: act as intermediaries in the operation, seeking strategic purchasing opportunities, leading negotiations and offering guidance throughout the process. They are most often used when the buy-side does not have an internal Corporate Venture or M&A team.
- Banks, Financial Agents or Investment Banking: are responsible for the financial structuring of the operation, that is, they raise the capital necessary to carry out the acquisition.
It is important to emphasize that, whether on the sell-side or the buy-side, due to their complexity, having experienced professionals is essential to successfully conduct an M&A operation. The numerous steps and level of detail involved require specialized knowledge that is not widely disseminated. For entrepreneurs who are selling a company for the first time, this transaction can represent a significant change in their lives.
Therefore, forming a high-level team to follow this journey to the end is extremely important, in order to avoid any room for error. Count on 3Capital Partners in both stages of your company’s transaction, our team will take all your expertise to ensure a safe and successful operation!
