At Vertus Group, a division of Jonas Software and Constellation Software Inc., we take a unique and streamlined approach to acquisitions, focusing on building long-term partnerships and creating value for the businesses we acquire.

Join Director of M&A for Vertus Group, Zach Plener, as he walks you step-by-step through our acquisitions process, and how exactly we prioritize transparency, efficiency, and most-importantly, people.

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Step 1: Introductory Call

In the introduction stage, companies will speak to one of our business development (BD) representatives. In these first calls, the BD representatives will ask about the business to get a high-level understanding of the platform, software, business model, how revenue is earned, employee structure, and what the company's goals are.

We're looking for how the owner and management team view the future. What do they want to see in the future? How to they want to succeed? And more importantly, how can we help them succeed?

I think where we succeed the most is getting to know the people that made the business and making sure that we are the right home for them by aligning expectations and goals. We want to make sure that if we do go through the process, there is an honest and open line of communication and we are all on the same page of what the expectations are.

Our role is very relationship based. It's making sure that we establish the rapport and create a relationship with the founder.

We'll never move forward in a process if both parties aren't aligned or if we feel that maybe we won't be the best acquirer or we can't do the business justice and give it the proper tools that it's looking for in a potential sale.

Step 2: Signing the NDA

The NDA stage is vital for both parties. It's particularly important for the seller and management team because it gives them an understanding that there is sensitivity and confidentiality with their data.

It also helps from our perspective since we can move forward in the process knowing that there is comfort and a set agreement in place between both parties where we can ask the right questions and gather the right information.

Step 3: Preliminary Due Diligence

When it's time to gather more information, we will go back to the business with some questions and have more conversations. We loop in some of our business experts, see if there are potential synergies, and come to an understanding of how we could make the business great and how we can work together.

I think Vertus Group is quite different when we gather information because it's a conversation. It's us genuinely just trying to learn about a business. While financials and fundamentals are extremely important, I think what is most important to us is understanding the fit and getting to know the business by getting to know the people behind it.

If we have this type of understanding of the business, it is much easier to understand the financials. There is a lot that goes into these businesses, founders and their teams have worked incredibly hard and it's admirable and impressive to see what they have built. So try to do it justice.

By us having more conversations and building the relationship, it's easier to understand the financials and then it's easier to make sure we're giving the fair amount of value for the business.

Step 4: Letter of Intent

As we move through the process, we will provide a letter of intent (LOI).

That LOI will essentially be a simplified version of a purchase agreement. It will go over key assumptions we've made, the purchase price and structure of it, and it will go over some other legal items like representation, warranties, survival periods, etcetera.

It's really meant to make the next stage of the process simpler. We lay out all of these assumptions and legal items so that when we move to the purchase agreement, it's quicker and simpler since there's a preexisting mutual understanding.

The most important thing as we move through the LOI stage is having good legal counsel on both sides. Our in-house legal team is really good at getting through concerns quickly and finding a reasonable and fair solution to any issues that may arise.

Step 5: Due Diligence

Due diligence is a different animal. It is a lot of requests, but we try our best to keep it in a concise, clear, and organized fashion.

How the process works is we'll send a checklist, which is comprised of questions in specific areas are tax, financials, IP, IT security, HR, legal, contractual obligations, and more. We keep it very organized and we'll gather all of the information.

Once it is gathered, we will review it and ask follow-up questions. We will do all the work behind the scenes and then set up for diligence sessions. These sessions are typically a financial session, technical sessions, HR session, and then it culminates in a one or two day in-person deep dive into the business.

What these days are is essentially us sitting down with the management team and key employees of the business to gain a deeper understanding of the business as a whole. It helps us see how the business thinks about sales and marketing, professional services, maintenance and support, employees, to pretty much all aspects of the business you could think about.

We will fly out and do these sessions in-person wherever the business is. We are happy to bring our team there and build the relationship.

When we move past the in-person session, things start to pick up a little quicker. Why? Because we've gather all the information, we've had the deep conversations, and chance are we will be comfortable at this stage to move forward.

I think what make Vertus different, and what we do really well, is timing. We're very organized, so these processes move efficiently to where we can close within 45 days.

Our average close time is closer to 60 days, but we push to close within 45 days. Really what dictates that timing between 45 and 60 days is related to the purchase agreement and how quickly we can get through commentary.

Step 6: Approvals and Closing

The approval stage is really the last item to finish. It's getting that final approval from both sides.

For us, it is getting approval from our board, who is actively involved in diligence, to make sure we can proceed with the investment. For them, it is approval by the seller and the shareholders of the seller.

Three days before close are essentially wrapping up the purchase agreement, making sure that all of the management team is ready and comfortable for the next stage, and then it's us walking them through what the week after close is going to look like. The last thing we would want to do is close a deal without setting expectations of what the partnership will look like, and it is really just about making sure everybody is ready for that.

Once you sign, it's a big accomplishment and the culmination of a lot of hard work and effort from a lot of people. Hopefully, we can celebrate a little when we get those signatures on the paper and cheers to a good future.

Next Steps: Immediately Post-Close

What we'll do right after closing is meeting with any employees that did not know about the transaction. This is a company-wide meeting where we will let the management team talk to their employees before we come in to explain the situation. After, we will come in and give a full presentation of who we are, what the value we saw in the business, and what life is going to look like.

Most of the time, life is going to look very similar post-close to what it did pre-close. We don't go in and shift responsibilities or the business. We go in with the mindset of how do we help, how to we support, and how do we grow the business. This meeting is really an opportunity to field questions and make sure everyone is comfortable. We will likely do this in-person so we can meet everybody.

We have lots of people at Vertus Group who have been through acquisitions and rose through the ranks. They always talk about their scariest moment was the day after close. They think, "What is going to happen to me? What is going to happen to the business?" And I think that's where we are different because we really try not to change too much.

We try our best to keep it disruption-less, our goal is to help the business get better by implementing best practices. While there is a new reporting structure and work that comes in post-close, there is overall minimal impact to the day-to-day operations of the business and how employees are impacted.

It all starts with a conversation. Contact us to learn how Vertus Group can help your business grow.