02 · Target identified, before the LOI

Frame your offer before signing the letter of intent.

At this stage, you have neither full access to the file nor certainty on the price. Diligeo reviews the available documents on the target French SME, frames the valuation and prepares the draft letter of intent on that basis.

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Your situation

The company is identified and the first discussions are under way. The seller has shared a few documents, rarely more than ten. They are gauging how serious you are; you have to move forward without full visibility.

The question to settle

Do you make an offer, at what price, on what terms? The LOI sets the course for the rest of the negotiation: a mispriced offer, or missing conditions precedent, are paid for at audit time, or later.

The documents

The documents to gather.

From 3 to 20 documents, depending on what the seller has already shared: the review starts with what you have. Only the balance sheets are essential.

Balance sheets and income statements for the last three financial years
Interim accounts if the current financial year is well under way
Commercial lease
Company registration extract (Kbis) and articles of association
Org chart and aggregated payroll for a recent month
Order book
Main customer and supplier contracts
Vehicle, leasing and long-term rental contracts
Social-security compliance certificates (URSSAF) and tax-compliance certificates

The deliverable

A pre-audit report and the draft LOI.

The report covers: presentation of the target, financial performance restated on the available documents, framing of the valuation, points to watch, and structuring of the offer. Plus the draft letter of intent, ready to review with your lawyer.

The draft LOI is delivered only if the file justifies it. Three possible outcomes: send (the file supports the offer), hold (points to clarify first, listed out), walk away (a memo explaining why this file does not support an offer as it stands).

Draft letter of intent · working document Excerpt

Subject: indicative offer to acquire 100% of the shares

Proposed price: €535,000 (of which €480,000 in cash at signing).

Conditions precedent

Securing bank financing.
Financial and employment audit confirming the figures presented.
Effective transfer of the two main customer contracts.

Offer valid for: 45 days.

draft · to review with your lawyer before sending

Joinery & fit-out SME · Solvent (non-distressed) sale Valuation

Negotiation: decoding the asking price

Agreement on the business value: €595k. The sale mandate stacks €180k of net assets on top; the earnings-based method deducts the debt: the shares are worth €535k, not 775.

p. 9 / 18 · excerpt

Composite excerpt with fictional figures, representative of the delivered format.

Pricing

On request.

Depending on the documents available. An initial discussion sets the scope.

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