Detailed financial disclosures including:

The nature of the relationship between the selling party and the seller.

The nature of the business, The location of the firm and number of employees.

Three (3) years each of historical financial statements composed of at least:

• Income statements
• Balance sheets (including a balance sheet current to within 90 days)
• Cash flow statements
• Historical accounts payable/accounts receivable data and any aging information
• Historical capital expenditure data

Three (3) years of current and historical details with respect to:

• The entity's capital structure
• The nature of the debt or other obligation
  

Of course, the more detail we are given the better. Accordingly we give some preference to opportunities where additional information is available. Along these lines we prefer to see:

• Income statements
• Balance sheets (including a balance sheet current to within 90 days)
• Cash flow statements
• Historical accounts payable/accounts receivable data and any aging information
• Historical capital expenditure (CapEx) data

Five (5) years of current and historical details with respect to:

• The entity's capital structure
• The nature of the debt or other obligation
• Details of any shareholder agreements/voting trusts/dispositions
• Current descriptions of the structure, operations and facilities of the entity, including any subsidiaries and/or partnerships
• Biographical data on the officers, directors, key employees, etc.
• A summary of patents, copyrights, and other intellectual property
• A summary of significant contracts or other recurring revenue opportunities

Perhaps most importantly, we seek to understand the motivations of the seller. A transaction s a meeting of the minds. The more frank and open disclosure about the seller's motivations we are privy to the better we can tailor a solution that addresses the sellers many needs. We highly encourage sellers to take particular care in crafting their statement on motivations.

We regularly give priority in our evaluations to opportunities that err on the side of disclosure over those with more limited detail.

If we continue to be interested we generally contact the seller or seller's representative to arrange for an initial, and very preliminary, discussion between our Mergers and Acquisition's group and representatives from the seller's management team. In this, our approach is somewhat different to traditional private equity firms. By putting an early focus on cursory discussions with the seller's management we avoid becoming involved in transactions where our particular strengths and interests are not useful or compelling in the transaction. We also find that this approach, management discussions first, helps us avoid wasting time on transactions that are being created "on-the-fly" by third parties, as opposed to deals where management has already committed to a definitive disposition of some kind for the entity.

If our Mergers and Acquisitions Group believes the deal meets our criteria it is presented to the partnership at our weekly partner meeting. If our Mergers and Acquisitions Group can convince our Partners that a viable and interesting deal exists, things begin to move very quickly. At this point we generally issue a non-binding "Expression of Continued Interest" and begin the process of conducting detailed due diligence before formulating our initial structural proposal for a transaction.

Throughout the process we try to tread lightly, understand the needs and desires of the various stakeholders in the process and, above all, always take the high road.

Working closely with the seller's representatives we craft a detailed set of criteria to avoid inadvertent disclosures or triggering the ever busy rumor mill. No one enjoys the often cloak-and-daggeresque measures required to avoid turning a working environment corrosive, but we do take a certain pride in being able to keep the process "under wraps."

Post-transaction, many sellers are not anxious to publicize the details (or even existence) of the sale. Accordingly, we have a strict policy of not commenting on acquisitions unless expressly requested to by the seller. We do not press "tombstones," or placard our walls with the trappings of hostile takeovers. We rely, instead, on sellers and, occasionally, the employees of our portfolio companies to sing our praises.

Often, however, we find the seller proud to announce our affiliation as a "white knight" purchaser of units that might otherwise have been closed. In these cases we work carefully with the seller to craft a suitable set of criteria our professionals use to guide our discussions with respect to the transaction. We view it as our job to make a seller look good. It's a measure of our success that 33% of firm's we have made purchases from have returned to us to explore other divestiture opportunities.