Process letter

Definition:

A Process Letter is a formal document used in the M&A process to inform potential buyers or investors about the structure, timeline, and next steps of a transaction. It provides key details on how participants can proceed in the process and what requirements must be met. Depending on the type of transaction, a Process Letter may serve as a general roadmap or a specific auction guide.

Contents of a Process Letter:

• Transaction Overview: Introduction to the background and purpose of the deal.
• Access to Information: Details on available documents after signing a Non-Disclosure Agreement (NDA).
• Process Structure and Timeline: A clear overview of the transaction phases, deadlines, and upcoming steps.
• Guidance for Participants: Instructions on how to engage in the process, including required documentation or indicative offers.
• Evaluation and Selection Criteria: If relevant, key factors considered in selecting potential buyers or investors.
• Contact Information: Advisors or deal representatives for further inquiries.

Significance in the M&A Process:

A Process Letter plays a key role in structuring the transaction and ensuring all involved parties understand the next steps. It helps to:

• Enhance transparency and efficiency throughout the sale process.
• Ensure all participants operate under the same conditions.
• Narrow down the pool of serious bidders or investors.

Difference from a Bid Procedure Letter:

A Bid Procedure Letter is a specific type of Process Letter used in auction-based M&A transactions. While a Process Letter provides general process guidance, a Bid Procedure Letter outlines specific rules, requirements, and deadlines for submitting indicative or binding offers.