Buy Side

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Definition: Buy Side


Buy Side


Full Definition of Buy Side


A buy side engagement is one in which an investment banker or mergers and acquisitions advisor collaborates with a buyer to identify an acquisition target. A typical buy side engagement includes the following tasks:

  • Target identification entails assessing all potential companies that meet the buyer’s criteria, which usually necessitates extensive local knowledge or extensive market research.
  • Target assessment entails evaluating the target’s financial performance as well as the existing management team to see if it is a good fit.
  • Valuation entails determining a price range based on comparables in the same industry or what the buyer is willing to pay.
  • Structuring entails determining what capital structure works best for the buyer while still meeting the target’s expectations.
  • Letter of intent – creating and presenting a letter of intent on behalf of the buyer. It usually necessitates a thorough explanation of how the enterprise value is calculated as well as a breakdown of the proposed capital structure.
  • Due diligence – A buy side advisor is heavily involved in due diligence, often leading it on behalf of the buyer. The primary responsibility is to validate the various assumptions made during the target assessment and valuation stages.
  • Closing – collaborate with other advisors, accountants, lawyers, and tax counsel to ensure that all aspects of the acquisition are taken care of so that the transaction can close.

Financial buyers, such as private equity firms, typically conduct buy side engagements when they have a general investment approach (that is, they do not focus on a specific industry) or are looking to invest in a different geography. If a private equity firm wants to enter a new industry (say, health care), but lacks the necessary expertise, they will frequently hire an investment bank on a buy side engagement to find suitable candidates.

Similarly, a niche private equity firm that works in a specific industry (say, oil and gas) may have the skills to find good candidates but lack the local knowledge needed to penetrate a specific geography (for example, a U.S.-based firm looking for companies in the Middle East). Because of the local expertise that the advisor can provide, the buy side engagement is extremely valuable in this case.


Synonyms For Buy Side


Buy Side Engagement
Buy Side Mandate
Buy Side Deal


Related Phrases


Private Equity
Strategic Buyer
Strategic Private Equity
Valuation
Letter of Intent (LOI)
Due Diligence
Sell Side
Investment Bank
Mergers and Acquisitions
Financial Buyer


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Definition Sources


Definitions for Buy Side are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th January, 2022 | 0 Views.