“We strongly believe that the only clear path to maximum value and favorable terms is a well run, closed auction process.” SteelTree Partners utilizes a closed auction process which maximizes both the price paid per tower and provides the best terms for the seller’s individual situation.
The Process Follows These Steps:
- 2REVIEW OF TOWER ASSETS
The process begins with SteelTree’s comprehensive review of the subject tower or portfolio of towers. SteelTree reviews each particular tower and on larger portfolios will often physically visit the towers to truly understand the unique characteristics of the portfolio.
- 3CREATION OF A CONFIDENTIAL OFFERING MEMORANDUM
SteelTree works with the seller to gather the data that buyers will want to see. Having bought and sold towers previously, the principals of SteelTree are familiar with those factors that buyers need to know to provide a qualified offer. The offering memorandum will identify the positive and negative aspects of the portfolio so as to credibly illuminate the unique factors that contribute to higher value.
- 4DISTRIBUTION OF THE OFFERING MEMORANDUM TO QUALIFIED BUYERS
The typical tower seller may choose to contact the public tower companies and request an unsolicited offer. They incorrectly assume that the values they will receive in a private inquiry without any competition among the known buyers will be the highest values achievable in the market. This can be a big mistake as buyers tend to value assets in dramatically different ways depending on motivations at the time. For example, some buyers like growth portfolios while others prefer purchasing mature cash flow assets. Some prefer cellular towers while others prefer broadcast towers. Some buyers forecast aggressive lease-up and are therefore willing to pay a premium while others are more conservative. The key to selling a tower asset or assets is to understand the specific tower(s) and to know which buyers will be most attracted to the tower(s).
- 5CLOSED AUCTION
SteelTree has found through experience that there is no reason to divulge an “ask” price with the offering memorandum; in doing so the potential value will be undercut every time. Instead, SteelTree solicits bids from potential buyers in a competitive closed auction process which may be taken through several rounds. The auction is closed in that the potential buyers are a pre-qualified pool of known purchasers of the given assets class. SteelTree requires that all participants submit their non-binding offers by way of a letter of intent which details the desired transactional terms as well as the method of payment.
- 6REVIEW OF FIRST ROUND RESULTS WITH SELLER
Upon receipt of the initial bids, SteelTree provides the seller with a matrix showing the offer terms for each of the various respondents to the blind auction. The matrix includes the amount offer as well as intangibles about the various sellers. The highest offer is not always the best offer and SteelTree uses the matrix to illuminate the differences between the offers.
- 7REQUEST FOR UPDATED OFFERS
SteelTree assists the seller with determining the top group of offers and then schedules conference calls with those
contenders. The purpose of the conference call is two fold:
- 1. the seller has the opportunity to build credibility with the buyers and answer questions; and
- 2. the buyers can describe their methods in doing a transaction.
Buyers are then asked to submit their final and best offers knowing that others are also interested in winning the
opportunity to purchase the assets.
- 8DECISION TIME
Typically, there is one offer that rises above the others. If not, then SteelTree will provide historical data about the various parties. How easy were they to work with on previous deals? When unforeseen issues arise, how flexible was that buyer in working around them? When the seller is satisfied their questions have been answered, they decide on which buyer to move forward with. SteelTree will review the letter of intent and recommend legal counsel to assist the seller if the seller’s legal counsel isn’t familiar with tower sales.
- 9PURCHASE AGREEMENT
Unlike other tower sell-side M&A advisors, SteelTree doesn’t stop working when it comes time to finalize the purchase and sale agreement. Having worked with all of the buyers before, SteelTree is familiar with where they have the latitude to change the agreement language and where they don’t. SteelTree will work with your legal counsel and advise you on how to get the agreement to a point where both buyer and seller can live with it.
Typically, the above process takes about 2-3 months depending upon the size of the transaction and the completeness (or lack thereof) of the seller’s documentation and due diligence.