Tools for Self-funded Acquisition Entrepreneurs

Private Placement Memo (PPM)

A PPM is one of the first documents a searcher needs to create. This is your resume and search thesis. You need it to general investor interested and commitments before you find a deal.

Indication of Interest (IOI)

An Indication of Interest is a preliminary statement made by a searcher expressing interest in acquiring a business to a broker or owner.

Letter of Intent (LOI)

An LOI is a more formal document that outlines the proposed terms and conditions of a potential deal. It signifies a higher level of commitment compared to an IOI. A Letter of Intent typically includes key details such as the purchase price, payment terms, due diligence requirements, and other significant terms and conditions. Once accepted, both parties are expected to negotiate in good faith and work towards finalizing the deal.

Special Purpose Vehicle (SPV)

An SPV is a legal entity that Self-funded searchers may use to create to group investors into a single entity to provide equity for the acquisition. It is often used to isolate or separate financial risks and liabilities associated with the acquisition. SPVs enable searchers to maintain a clean capitalization table regardless of the number of equity investors they take on.

Diligence checklist and timeline

Once an LOI is sign by a potential seller the due diligence process needs to be completed quickly. For the first time searcher this process can be very daunting. This checklist and timeline template will help stay on track.

Quality of Earnings (QoE)

A company's quality of earnings is revealed by dismissing any anomalies, accounting tricks, or one-time events that may skew the real EBITA or ODE. Once these are removed, the earnings that are derived from higher sales or lower costs can be seen clearly. This template reveals the red flags you should look for in the financial statements.

Thank you!

• Okay