If the business looks promising to us, our next step is to get to know the leadership team on a personal and business level. We like to spend time together in unstructured environments (e.g., hiking, skiing, boating, etc.) to understand the team’s values, histories, desires, hopes and strategies. First, we determine whether a potential Portfolio Partner appears to fit our criteria. This is a relatively simple process consisting of a review of the answers to some basic due diligence questions and some industry research on our part.
If everyone believes we can work together, the Tradepost team creates a multi-year business plan and financial forecast with input from the leadership team.
This plan and forecast also provide the foundation for our valuation conversations. (If a deal ultimately does not come to pass, this work product is the property of the leadership team.)
Once we agree at a high level to the valuation, we discuss a structure that fits everyone’s desires. These structures can result in Tradepost taking a majority or a minority position. They can also include earn outs. They always include some form of rolled equity by the business’s current owners.
Once all of the aforementioned is satisfactorily completed from everyone’s perspectives, Tradepost completes its standard due diligence, the parties negotiated a purchase and sale agreement, and the transaction closes.
