Brainforge Knowledge

ma-target-screening-contract

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M&A Target Screening Contract

Purpose: enforce deterministic and auditable screening so Brainforge advances only acquisition targets that fit thesis, economics, and integration constraints.

1) Source-of-truth policy

Use split authority to avoid deal drift:

  • CRM/pipeline tracker is source of truth for:

    • stage status
    • owner assignments
    • meeting history and next actions

  • Diligence workspace/repo is source of truth for:

    • screening memo
    • financial analysis
    • risk register
    • integration plan artifacts

If stage status changes without required artifacts, block stage advancement.

2) Canonical target identifiers

Every target record must include:

  • target_slug
  • legal_entity_name
  • primary_contact
  • owner_intent_status (exit | majority sale | minority sale)
  • current_stage (source | screen | qualify | diligence | loi | confirmatory | close | integrate)

3) Mandatory intake data (screen stage)

Minimum fields before a target can move from screen -> qualify:

  • Last 3 years:
    • revenue
    • EBITDA
    • growth trend notes
  • Current run-rate and pipeline quality estimate
  • Service mix and niche statement
  • Top 10 clients and concentration snapshot
  • Seller motivation and timeline
  • Team composition (headcount, key leaders, dependency on founder)

4) Screening scorecard

Use weighted scoring out of 100:

DimensionWeightPass rule
Financial profile fit25EBITDA and revenue in target band or justified exception
Growth quality (3-year trend)20positive and explainable growth with acceptable volatility
Niche strategic fit20clear fit to vertical/platform/technical thesis
Seller transition fit15owner transition posture aligns with buyout model
Client concentration + retention risk10no unmitigated single-client fragility
Integration readiness10systems, team, and process can absorb into Brainforge

Baseline threshold:

  • >= 75: advance
  • 65-74: hold for partner review
  • < 65: disqualify (or re-open only with explicit rationale)

5) Stage-gate artifact contract

Required for all active deals:

  • maintain ma-agency-investor-checklist.md for the target
  • track completion percentage and unresolved critical questions
  • unresolved critical questions block stage movement

Source → Screen

  • target profile card
  • first thesis-fit note

Screen → Qualify

  • completed scorecard
  • preliminary risk note
  • explicit “why now” statement

Qualify → Diligence

  • discovery call memo
  • initial valuation range hypothesis
  • seller role transition hypothesis

Diligence → LOI

  • financial pack (P&L, QoE-lite checks, client concentration)
  • legal/commercial red-flag memo
  • Day 1 operating model draft
  • agency investor checklist completed with owner-attested answers and no unresolved critical unknowns

LOI → Confirmatory Diligence

  • signed LOI
  • confirmatory diligence checklist
  • integration owner assignment

Confirmatory Diligence → Close

  • issue log closed or accepted with mitigation
  • final deal economics + downside plan
  • Day 100 plan approved
  • agency investor checklist refreshed, with confirmatory updates and no unresolved critical unknowns

6) Conflict handling

If any of these conflict, block movement to next stage:

  • valuation assumptions differ across finance and deal memo
  • seller transition plan conflicts with operating model
  • concentration risk unresolved in downside case
  • required approvers missing

Resolution policy:

  1. log conflict as blocker
  2. assign single owner
  3. issue written resolution memo
  4. re-review in next stage-gate meeting

7) Reporting format (weekly)

Every weekly review returns:

  • stage distribution and velocity
  • pass/fail by scorecard dimension
  • top 3 deal blockers
  • deals at risk of stalling
  • next 2-week action plan with owners and due dates
  • agency investor checklist completion percentage by active deal
  • unresolved critical checklist questions with owner + due date

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