Investment step by step

The prospect of a complex and long-term investment process may raise concerns for the owners, managers and employees of the company concerned. Thanks to our experience and professionalism, Avallon guarantees an efficient operation.

We fully understand how important it is to focus on operational activity, even during the period of capital changes. Thanks to our flexibility and open approach, we are able to execute transactions quickly and smoothly . This can be seen by the way we have looked after every investment over the years.

Below we present the model course of the investment process:

1

Direct contact

The basis for cooperation is direct contact between the Avallon fund and the company’s management. We do not use application forms. The initial assessment of the project is based on discussing the objectives and conditions of the transaction with people who will have an essential role in the transaction. We expect basic information about the company to be made available after signing a letter of confidentiality. At this stage, we would also like to have the opportunity to visit the company and get acquainted with its structure and processes. An analysis of the information obtained allows us to make a decision on the rationality of the transaction.

2

Letter of intent

If the fund is interested in a capital investment, then all parties sign a letter of intent which describes the relations between the participants and the outlines of the subsequent stages of the process.

3

Due diligence

We meticulously analyse each project. We use the methodology resulting from the many years of our experience. At this stage, full cooperation from the surveyed company is required. We discuss together the effects of a buyout implementation plan.

4

Arrangement of transaction terms

Arrangements are made on key terms of cooperation (“Term Sheets”) with Managers and Sellers. These terms and conditions are signed once the fund has made its initial investment decision. The final decision depends on the successful completion of negotiations and in-depth examinations of the company in selected areas (if necessary).

5

The offer

A submission of a proposal for the acquisition of shares is provided and commencement of the final negotiations with the seller begin.

6

Enhanced Due Diligence

A final decision may require an in-depth audit of the company. The decision is made after preliminary negotiations and arrangements with the owner as to the essential parameters of the transaction (often after signing the preliminary agreement). Usually, the in-depth investigation concerns the areas of finance and accounting, fiscal and legal areas as well as environmental protection.

7

Final negotiations

At this stage, we agree on the final terms of the contract with the sellers. In the case of management buyouts, due to the sensitive position of managers we are prepared to play a leading role in dialogue with the owners.

8

Finalization of transaction

After completing the previous stages, we make the final investment decision. We reaffirm the final terms of the transaction between all parties. With the purchase agreements signed, the shareholders agreement regulating the relations between the shareholders at the end of the buyout and the conclusion of agreements with banks providing debt financing constitute the closing of the transaction and form the basis for activating the fund’s resources.

Summary

Several circumstances, including factors beyond the control of the parties involved in the transaction, can influence the dynamics of the project. We make every effort to ensure that the whole process runs smoothly, concludes to the satisfaction of all interested parties and does not interfere with the current activity of the company.