Keys to successfully completing an M&A deal

Keys to successfully completing an M&A deal

Due to the technical nature of M&A, advice tends to focus purely on the “how”; yet the best conversations start with the “why” or the “what ifs” – the motivations and stories behind strategic M&A.

The stories are nearly always very personal and about life journeys. Many business leaders are on a build, buy and sell strategy with a goal of building a legacy. It can be as much about achievement and fulfilment, both financial and personal as it is the strategy.

For those on this journey in pursuit of achieving this legacy, personal questions need to be answered first:

  • What is it I’m seeking to achieve?
  • How will I achieve that?
  • What acquisitions will accelerate progress?
  • Is family succession important?
  • What are my financial goals?
  • When should I cash in?
  • What will I do afterwards?

The definition of these motivations, the “whys” and “what ifs”, become the foundation on which to build the “how”, to best do the transaction – a recipe for success. Each step of the journey needs to be supported by its own, well articulated, strategic logic.

Acquisitions will ideally encompass the four corners of strategic M&A, economies of scale, synergy, shareholder value and market disruption. Today’s market demands additional spectrums, such as improving the performance of the target company and securing new products or skills.

When exiting a business, personal motivations gain momentum. It’s not just purely about how to maximise the value pre-sale by ensuring recurring revenue, building a strong brand with sustainability and growth prospects; there are also, more individual elements to consider. Does a sale truly realise my ambitions? How should I invest the proceeds effectively? What next; retire, start afresh as a serial entrepreneur or business angel investor?

Whilst the process and technicalities of M&A are important; the “whys”, the “what ifs” are equally critical to achieving success. The deals that create better companies or the personal journey’s behind the deal are the true centre stage.

An M&A deal is the biggest deal of your life, so completing a successful transaction is key to your future. Knowing a few key M&A tips — whether you’re merging or acquiring — increases your odds of successfully completing an M&A deal. Secrets to success include the following:

  • Don’t allow yourself to get too high or too low during the process. M&A is a roller coaster ride, with ups and downs around every turn as a deal you think is wrapped up one day falls apart the next day . . . only to come back together on the third day. You have to be able to keep an even keel.
  • Check emotion at the door. Despite the frustrations of M&A, you need to keep your emotions in check. Yelling and screaming don’t get the deal done. Logic, facts and a cool demeanour do.

  • Don’t jump at the first offer. Ideally, you want to have multiple offers before deciding which deal to accept. Having options increases your chances of getting a great deal.

  • Don’t hold out for a marginally better offer. If you want to do a deal and the offer is sufficient, take it. Part of something is better than all of nothing, which may be what you get if you wait around for the perfect deal that never comes.

  • Know when your position is weak or strong. Overplaying a strong hand can chase off otherwise suitable deals; misplaying a weak hand can scuttle the deal and perhaps your career!

  • The market is the best way to determine your company’s valuation. In other words, business appraisal services have limited value. Get out in the market and have actual conversations with actual Buyers.

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