Taking the mystery out of the process
There’s nothing to lose by business owners talking to us early, even if they are unsure about their timeframe for taking on a financial partner. Initial conversations are always informal. Our ability to be flexible and accommodate different ideas means there is no standard process that we follow during an investment. The following sets out how it usually works.
A totally confidential meeting and open discussion between Direct Capital and the business owner or management team. We talk about the business, the opportunity and what they’re aiming to achieve. We both have a chance to gauge whether we’re a good fit.
The assessment stage
If the opportunity seems right then we’ll start doing our homework. We’ll engage in research and conclude whether Direct Capital is the right business partner for the business and the situation.
Getting to know each other
If the management team is going to be part of a broader ownership team then we like to meet them as well. It’s important to determine whether we are mutually interested in working together, that we get on, and that we have key values and aspirations in common.
This is the point where we discuss various ways in which value can be set and the investment structured. By this stage there’s a collective interest in going ahead with an investment so there’s a common desire to accommodate one another’s preferences.
Deal or no deal
After completing theses steps (which can happen within as little as a week or two), we can mutually agree an investment, or move on. The beauty of our process is that there is no damage if there is no investment. We are not competitors of the company and we will keep anything we have learned entirely confidential.
If we shake hands on a mutually acceptable deal, we’ll move towards documentation and due diligence. The timeframe for this varies hugely depending on how readily available company information is. It can take from two weeks to two months.
Up until now, we’ve assumed that the picture that’s been painted of the business reflects the reality. The due diligence process gives us assurance this is the case and that we can proceed with confidence. We won’t undertake due diligence until all other matters are agreed.
The full and final terms of the deal are documented and checked. The Sale and Purchase and Shareholders’ agreements are signed and we have a deal. Then, it’s just a matter of who pays for the champagne!