Here’s what you should know about an EOI

What do you mean by EOI?

Have you already heard about this term i.e. EOI? Well, EOI stands for Expression of Interest and this term is specifically used in the initial transaction documents when a buyer is interested to acquire a seller’s company. EOI also ensures that the buyer is interested and ready to pay a certain amount of valuation to the seller
This term is quite popular in the field of M&A deals. By mentioning EOI, the buyer showcases that party has serious interests to acquire the seller’s firm or company through a formal process. .

Therefore, EOI is an extremely important part in the introductory phases of any M&A deal agreement. As mentioned, it specifies that the buyer is interested to acquire the seller’s company in order to take it for further betterments and higher accomplishments. In this context, if you are now keen to know more about EOI or Expression of Interest, then you have definitely landed on the right page. So, please continue checking the following sections to know more about EOI and its contents.

Reveal the Contents of EOI

Whether you’re a seller or a buyer and you are interested to use an EOI, then make sure to know more about its contents (as described in the below sections).

1) Purchase Price: It is an important part of the EOI document. The basic purpose of the EOI is that the buyer is interested to acquire the seller’s company and close the deal. That’s why EOI must include the total payable or purchase amount which includes complete valuations and payments for bonuses, ESOPs, and all other related items that are issued by a seller.

In this case, please note that the buyer has the right to change or modify the payment terms and considerations. What’s more, the buyer may decide not to proceed with the transaction. That’s primarily because — the document shows only an expression of interest and it’s a non-binding document for both parties.

2) Valuation Methodology: EOI also ensures to mention the key valuation methodology as well. The key assumptions that are used to make this valuation should also be mentioned in EOI. For example, EOI should ensure the following assumptions:

The historical financials that are presented by the seller should be accurate and complete.The projections that the seller has provided must be fair and accurate.All the contracts i.e. employment contracts, vendor contracts, facilities contracts, and customer contracts must be transferred to the buyer without any additional payment.

3) Due Diligence: Conducting due diligence is an important part of completing a successful deal. For example, it should highlight the following areas of a business, such as Business, Legal, Customer Contracts, Finance, Sales and Marketing, Vendor Contracts, Facility, Human Resources, Plant, Machinery, and Technology. EOI checks for the due diligence of all of these above-mentioned business areas.

4) Transaction Structure: Another content of an EOI can be the transaction structure. Please note that the transaction structure is important for both buyer and seller. It indicates whether the buyer is opting for a complete buyout or they are most interested in carving out a particular division. Also, if the buyer is interested in purchasing some particular type of assets and contracts, then that should be mentioned here too. Additionally, the transaction structure part of an EOI should mention how the buyer is going to fund the entire purchase price of the transaction. For example, it can be in the form of a cash balance or bank loan.

5) Management Retention Plan: This part can be also mentioned in an EOI. It implies whether the buyer is interested in retaining the management level positions as it has been earlier or the buyer is more interested in re-organizing and re-arranging everything.

6) Approvals Needed for the Transaction: For closing the deal, the buyer will definitely need the sign-off from the board of directors. Therefore, EOI may include that part too so that the seller can also know about it. Additionally, properly timelines for obtaining such approvals can be mentioned as well.

7) Transition and Support Services: It may be possible that the buyer may require some transition and support services for a certain time of time from the buyer. In such cases, no additional costs will be borne by the buyer apart from the previously decided purchase price for such services.

8) Conduct of Business: It’s expected that the seller will conduct the business as per the normal state. In any case, if the seller wants to change this, then the change must be intimated to the buyer as well. This condition of effective conduct of business must be mentioned in EOI.

9) Confidentiality: This is the rule of confidentiality that should be included in an EOI. It implies that the seller can not disclose the name of the buyer’s company and the purchase consideration to any third party without the written consent and approval from the buyer. After all the definitive agreements are sealed and signed-off, then only the seller can reveal such details publicly.

10) Transaction Expenses: In an EOI, it’s clearly emphasized any transaction expenses need to be borne by the individual party on its own. Such transaction expenses can be related to the following areas of a business, such as negotiation, due diligence, legal support, professional support, and drafting of all legal agreements.

11) Non-Binding Agreement: EOI must ensure to mention this part too i.e. it’s basically a non-binding agreement. To be more precise, it’s an expression of interest. Of course, no party is liable to close and sign-off the deal. And, neither the seller or the buyer will be allowed to file any legal case of damage for providing an EOI.

The Final Verdict:

This is another term that we can see in company stocks analysis.

With this, you have revealed a brief overview of EOI and its contents. All of these above-mentioned eleven factors can be mentioned in an EOI. Apart from that, there will be the last paragraph of thanking note where the buyer will like to thank the seller for creating a sale opportunity for them. Plus, the buyer’s contact details should be also mentioned in an EOI (Expression of Interest) so that the buyer can opt for further discussion, communication, and clarification.

Understanding Founding Partner

Are you looking for an article that has all the information about the founding partner? If yes, then finally your search is over. In this article, you will get all the information regarding the founding partner. And some of the frequently asked questions regarding the founding partner are also mentioned. So if this sounds interesting, then keep reading this article. Now without wasting any time, let’s jump into the main deal.

What is a Founding Partner?

Founding director definition : Founding partner is a term that used to characterize the shareholders of an organization, firm, or company, which is sold to an equity-backed platform company on the very first roll-up. The normal procedure is that the platform company follows is the purchasing of a large organization that has strong people in the management area and powerful infrastructure, the bolt-on acquisitions are added after that. Before the occurrence of the price change in the stocks and mergers, the first entity shareholders or you can say, people who have bought the stocks in the initial big company, known as founding partners.

Understanding Roll-up and Bolt-on Acquisitions

Though the basic definition is mentioned above, but you will have to understand roll-up and bolt-up terms first, if you want to get a better idea about founding partners. When different small companies collaborate or collide together, then a bigger company is formed, considered as a roll-up. Generally when the market place is fragmented and all the similar companies, which compete do not have adequate means and resources to dominate or stand up alone in the market, then roll-ups happen. It is also known as consolidation. In majority of the cases, the first to initiate a roll-up is a bigger company that has an important role in market. This bigger company works with a private equity firm and rolls-up with the other low scale firms or companies, trading the same services and products.

After that, for the growth and to dominate the market and to expand the presence of the company in the market, bolt-on acquisitions are added to the larger company (platform). Generally, all the other small companies that have products and services and the small companies that are already consolidated are chosen by the private equity company, which started the consolidation. All the small companies that want to grow in the market but have limited means are bolt-on acquisitions. Though these companies have limited resources but they can offer geographical divarication or technological benefit to the main platform company.

Founding Partner Expansion

One of the most important things during a roll-up is that the shareholders must get in at the ground level. When the founding partners purchase the stocks at the original or initial price, then it is known as being on board soon or early. Due to the late joining, the bolt-on companies’ shareholders get the stock at a higher price as the firm starts growing and the stock prices increases. If the platform company dominates the market, everything in the roll-up process flows in a smooth manner and shares are revalued higher by the private equity company, then prices of the stock of the entire company increases.

It also indicates that the founding partner will also see less dilution to their own stock’s value. When the company does more transaction and with each finalized acquisition, less high-value stocks are required with each deal. Another important thing is that together with the benefits of increased stock valuation, it is also possible that founding partners can also hold a position in the management section or team. And founding partners can also sometimes fill the board seats in the platform company. At last, it is very beneficial to be a founding partner both in terms of placement and finance.

Some Frequently Asked Questions

So after covering all the fundamental information regarding founding partner, it’s time to answer some of the most asked questions:

1- How to Find a Founder Partner?

If you want to find a founder partner, then here are some ways that you can try:

• You should attend entrepreneurial meet-ups

• You can also join online groups on LinkedIn or Facebook

• Start with your friends and family

2- Difference between Co-founder and Founding Partner?

The main difference is that a co-founder is a person that is in the business from its very starting days and the founding partner is a co-founder of a partnership that is structured like a law firm or any other company.

3. Founding partner vs managing partner
Founding partner can be managing partner. The managing partner has two main roles: working as a partner (founding partner) doing business, and as the general manager. Difference is in roles because managing partner has one more additional task – to do day to day activities, manage. There are difference in payment too – founding partner will receive a distributive share of the partnership income every year and managing partner will get additional guaranteed payment, for management duties for the partnership.

General Partner in Business – Meaning and Definition

A general partner is an investor in a company who has unlimited liability and is responsible for his portion of all contract obligations.In each partnership, there could be more than one general partner. As a representative or an associate, a general partner is also a managing director or an involved partner accountable for the management of the GP finance. This article will clearly explain the working and operation of a general partner.

Definition of a General Partner

General partnerships finance or GP finance are entirely made up of general partners. It ensures that all parties are unrestricted responsible for the actions of relationships. In other words, a client may not only sue for the company’s business property but also sue for his personal property against a general partner. As unlimited liability exists for general partners, they might lose business and all personal assets.

A general partner will have power without the consent or knowledge of the other partners to act on behalf of the company. The general partner may have unlimited liability for the company’s liabilities, unlike restricted or silent Partners. This is the primary reason for inventing limited liability partnerships. Most people wanted to go into business but did not want a relationship to be held responsible. There must be at least one general partner for a limited liability partnership. As in a general partnership, this party assumes total liability.

Working of General Partners

It ensures that their trust in the business can only be destroyed. If a limited liability business was sued by the same customer, the business and only the general partner could sue its assets. The joint partners are not subject to personal charges. This organization promotes people to start companies.

It’s not all negative to be a general partner. General partners are entitled to run and decide on the company. Both these things can not be applied by law with joint partners. Clearly, shareholders are exclusive collaborators. General collaborators typically provide the companies with advanced know-how and expertise and add to their network of connections and customers. Since the general partners share management responsibilities, they each have more time to spend on professional tasks.

Disadvantages

For obligations of the partnership, a general partner may personally be blamed. For instance, a patient may seek medical harassment for a doctor. In some instances, the courts permitted the client to take action in the area of clinical practice against every general associates.

If the court makes a decision in support of the company, it would be the responsibility of all general partners. In reality, the general partner with the most capital invested in the company could take a higher share than the general partner whose supposed misconduct contributed to the litigation. If a general partner is ever required to fulfill the financial obligations of the partnership, its personal assets may be liquidated.

Final Verdict

This article shows that a general partner is an investor in a company and is a shareholder in its profits. So, a GP finance agreement is required between the partners to run a successful business together.

Investment Criteria for Success with Investments

Investment Criteria

Investment criteria is known as information that helps the buyer to access a complete acquisition target. This is a very important method used for buyers that are sophisticated. In this type of situation, buyers typically have two sets of criteria they analyze. The first aspect they consider are parameters that are disclosed publicly to institutions such as investment banks. The main reason for this is to properly inform investment bankers in regards to what the buyer is looking for. This is a very important factor for ensuring that the deal fits the buyer’s needs. The second aspect involves parameters developed specifically for internal review. This can help the buyer to determine whether or not the total acquisition should be pushed further in the process. These are the two main aspects/ criteria analyzed during the investment process.

It is important to note that the most commonly disclosed information/ investment criteria is size of the investment and industry. Some buyers disclose other information relating to the investment such as investment type. The investment type may also include management buyouts as well as other opportunities. Investment criteria is effectively used in many different situations. Using investment criteria is one of the main ways that buyers are able to quickly assess/ determine acquisition opportunity. Buyer’s main goal is to determine accurate acquisition opportunity. This is one of the most strategic methods for ensuring the investment is worth the buyer’s resources. This is the most common method in the industry for evaluation acquisition deals/ potential partnerships.

Sourcing and qualifying a range of new opportunities is completed more efficiently with the use of investment criteria. An example of this is private equity firms. Private equity firms can view over 100 companies before settling on one for an investment. If the investment criteria is clearly outlined and carefully constructed, the process moves along much faster for all parties involved. The process can be completed with less time as a result of clearly logged information on each company/ acquisition details.

If the investment criteria is disclosed to the public, the purpose is for generate deal flow. There are different reasons why investment criteria is disclosed either publicly or privately. The outcome is different in both of these scenarios. After the details of the deal have been compiled and analyzed, the next step is to consider the investment criteria that have been gathered. If the investment criteria is a match, an expression of interest may be authorized. A letter of intent may will also be issued if the investment criteria matches. A letter of intent may also be known as an LOI. An expression of intent may also an EOI. These are the two primary methods used after the initial evaluation has been completed.

There is also internal investment criteria that can be used such as overall strength of the management team, estimated IRR for a specific investment, customer diversification as well as other criteria that involves the investment. The main goal of this is to provide benefit when it comes to investment criteria.

There are one question – What criteria are used for making choice of investment ?

So I need to give example from trading industry !

Top Investment Criteria to consider when selecting stocks

The goal of every investor is to invest successfully. Well, before you start emptying your account to invest somewhere it is important to know that you need to research adequately. Today, everything has been made easy because the statistics and evaluation of a company are just at your disposal. All you need to do is to take time and do extensive research on various stocks that will bring good returns when you Invest. Investors who invest blindly end up losing a lot of money. Therefore, to be on the safe side there is a need to have a criterion on the way you will invest in the stock. Therefore I have provided criteria to help you choose the right stock to invest. Read on and find out.

Good current and projected profitability – Investment Criteria

The most important step to take when choosing the right stock is by looking at the company’s profile. This will help you to get some insights into their earnings, cash flow, and operating margins. By doing this you will have a wholesome statistics of the financial health of the company. Well, why do you think all that is necessary? Time and again investors have been subjected to a rude shock when they invest and incur huge loses. That is why the reliability of the company stocks should help you form a basis in decision making.

The company’s earnings will help you to know the reliability and how the company operates. It is vital to access cash per share to ensure you are investing in something profitable. Ensure you analyze the trend of the shares so that you can invest appropriately. However, it might take time for you to realize the profits but the most important thing is to check on the trends. Despite the time, it will take it is better to make profits out of your investment.

Earnings Momentum – Investment Criteria

As I had earlier said the earnings of a particular company form the basis of knowing the reliability and how the company operates. However, most investors have a weakness whereby they are more concerned with the current earnings of the company. This might give you false speculation because that could be the peak point of the earnings over a long time. So what should you do to make the right decision? Well, it is essential to be flexible and look at the earnings momentum of the company. Check if there is growth. Study these patterns by looking back at the company’s performance.

You can inquire for earning reports alongside reading analysis and future projections. This will help you to tell if the company is operating under pressure. For instance, if in the past five years it has posted the best earnings to years ago then that tells you that you are not guaranteed what the future holds. Some companies are not predictable which makes it risky to invest with them. It is better to settle on a company that is stable enough to help you make something out of your investment.

Asset utilization – Investment Criteria

Most companies have respective favorable asset utilization. Companies have a system in place that allows them to have assets to boost its financial performance. Therefore, this ratio gives the expected revenue earned from every asset that the company owns. This percentage varies from one company to another. For instance of a company if a company has an asset utilization ratio of 30 percent. It implies that it is getting approximately 30 cents for each dollar of assets that it owns. This can be likened to operating margin because all serve as parameters of knowing the company’s efficiency with time.

The importance of knowing the favorable asset utilization is to help you to know the duration and amount of your investment. It is easy to speculate on the returns. Companies that have more assets open up earning avenues which imply it is easy on your side to make a profit on your stocks.

Consider intrinsic value on your stocks – Investment Criteria

Considering intrinsic value is obtained through a series of complex evaluation models. It gives the real value of particular stocks which vary greatly with the market value. The importance of knowing the intrinsic value is to help you gain a better ground when choosing the right stock. It is always wise to settle for stock which has higher intrinsic value than the market value which will influence eventual price growth. Market value is often influenced by behavioral and investing factors which might fluctuate as time goes. As an investor, you would want a stable business platform that you can preconceive the expected returns on your stock.

Conservative Capital Structure – Investment Criteria

A company has conservative Capital Structure which determines the way it funds its business operations using equity and debt. This determines if the company can have short term liquidity and at the same time it covers operation finances without necessarily have to increase long term debt. This information will help you make a good choice when it comes to stocks that are worth investing in.

Investors use calculations and indicators to access the value and growth of stocks. These include Earning per share helps to compare companies that you can invest and get profits in return. Price to earnings ratio can help you to evaluate the relationship between the company’s stock and earnings which can be used to know earning per share. Dividents payout ration also helps investors to know what the company pays through dividends with what you can earn through the stocks.

These indicators will greatly help to enhance decision making when choosing stocks. The most important thing is to familiarize yourself with the information that pertains to stock markets. Don’t blindly invest where it will be hard to get the returns.

Conclusion

Every investor is usually optimistic to get a good profit from their investments. Well, as an investor your financial success depends on how you invest wisely. The criteria that I have listed in this article are simple and straightforward. You can also seek out professional advice from financial firms to help you understand more about stocks. Therefore, always do a comparative study between the companies and settle on the one which has a promising future. This is because companies face stiff competition which explains why you need to research well on stocks.

Of course, each industry has its own criteria such as investment criteria in project management or investment criteria in economic development etc. Criteria are different but principles are the same !

Deal Sheet Overview & Importance for Ultimate Success

A deal sheet is a specific record of documentation that pertains to an employee’s or entrepreneur’s experience for financial investments. The deals that are recorded on the deal sheet serve as proof that the individual is competent for future deals. For this reason deal sheets are important pieces of information. The purpose of deal sheets is to advance an individual’s career by identifying how the contributed to the success of past financial deals. It is important for each business person to keep specific records of all past deals they worked on. By keeping close record of past deals, future business partners and companies understand what you can bring to the deal. This is one of the best ways to document the work you contributed to. Some of the other most important details include valuation per share as well as well as yield per share.

If a business owner is selecting an investment banker for their business or an investment banking firm, they should always ask for their previous records (deal sheets). Deal sheets will help to determine the i-bankers’s ability to make deals. Completing a deal is often a team effort. By ensuring all members of the deal are qualified, the entire deal is likely to be successful. Deal sheets are a great way help employees be prepared. The deal sheet also provides the interviewer or appraiser with the right information to ask questions. Overall deal sheets are an important part of a successful deal. They have the ability to make the process of investing easier on both parties.

There are some basic background details that are standard for deal sheets. For example, if the number of deals is less than three, this information should be added to the resume instead of the deal sheet. This is one of the main reason why deal sheet are important. They list information more in depth compared to a standard, traditional resume. For junior associate, deal sheets should include the details of the work performed as well as specific details pertaining to the project. This helps to provide more information specifically for junior associates. It is also important to note that deal sheets should never include any confidential information about a deal. Confidential information is not listed on a deal sheet. This is very important to note as it preserves the privacy and exclusivity of each deal with respect to other partners/ investors.

Deal sheets should include all of the unique details that made the deal proprietary. For example, if the deal was complex, this should be outlined in the deal sheet. The deal sheet can include some of the challenges faced throughout the process and how the team was able to overcome obstacles. This is one of the main factors to include when creating a proper deal sheet. The deal sheet should be properly categorized according to the specific types of deals. By categorizing according to deal types, the deal sheet will be organized and cohesive. Deal sheets should always use bullet points for organization. The deal sheet should always contain specific dates of every deal. It is also important to list the deal sheet’s information in chronological order. If there is more than one deal for the same client, the details should be condensed into one item on the sheet. The last tip when creating a deal sheet is to update the sheet on a consistent basis. This helps to ensure all of the information is relevant and up to date.

Deal sheets provide information regarding the suitability of a deal for a specific individual based off of their previous experience. Previous experience helps individuals to shape and mold their skills to fit new projects and endeavors. This is why deals sheets are an important part of any successful business deal. Deal sheets are not the same as resumes, although the revolve around a similar concept. Both deal sheets and resumes contain information regarding past endeavors and a brief description of them. However, deal sheets pertain specifically to investment and the performance/outcome of these investments. Both deal sheets and resumes provide specific dates of initiation and completion.

Business owners often request deal sheets from potential investment firms they plan to work with. The main reason for this is for the owner to view the firm’s past deals and their performance. There are some main tips for successfully creating a deal sheet. A deal sheet should always be compiled early on. By comping a deal sheet early on, you are able to include all of the data about specific deals. It is not a good idea to create a deal sheet only when switching jobs. Having a deal sheet prior to leaving a job shows responsibility and initiative. It is also difficult to recall all details of a previous deal when it occurred many months ago. The next tip is to specifically describe the roles you held during the deal. For example, it is important to provide detailed outlines of your duties in the deal from start to finish.

If you have very limited experience, a deal sheet is not necessary. For example, if you have minimal experience with investment deals and other business transactions, simply include your relevant experience in bullet points on your resume. Creating bullet points on your resume instead of a deal sheet may be more effective for limited experience. It is also important to note any legal matters that occurred during the deal. This will help future business partners to understand how you were able to work under pressure and solve issues as they came up.

This is a strong marker of a successful individual that takes responsibility and initiative. You can also include deals that did not fully close on your deal sheet. Therefore it is possible to include a past deal that was not completed. If the experience from the deal helped contribute to your skill set today, you may include it. The last tip is to organize information in headings and categories. By providing heading and categories, you are able to successfully organize the information into one cohesive list.