Every M&A transaction can seem like a roller coaster ride taking many turns and with multiple hills to climb along the way. There can be times when the transaction feels like it is on the verge of failure, but take heart, this is not uncommon. There is no single road map that applies to every M&A transaction and each transaction comes with its own unique set of challenges and nuances. Successful transactions, however, do boast some common themes, not least of which is having realistic expectations of what to expect and a plan in place for addressing issues as they arise in a methodical and constructive manner. Some valuable guides for managing through a successful transaction include the following.
Remain Calm and Believe in the Transaction Process
Disruptions, transaction obstacles and demands for information and time can create pressures and take an emotional toll on everyone involved. These ups and downs in responding to questions and addressing impediments are typical, so you should not allow them to sideline your hopes for getting a transaction completed or let them overwhelm you with stress. Decisions made from a place of fear and emotion can often result in bad decisions. Instead, remain calm and recognize that the sales process is a deliberate and methodical exercise. An experienced M&A advisor will be able to lead you through the process and run interference to help keep the transaction on track while insulating the seller from some of the distractions.
Hire a Reliable M&A Advisor/Investment Banker
Most successful transactions rely on a team of skilled M&A professionals experienced in achieving the objectives of the seller and establishing realistic expectations while addressing and responding to the needs of buyers. Through exhaustive analysis to make sure the company is properly prepared before embarking on a sale, performing research to identify the most likely potential buyers, understanding the dynamics of the industry, gauging the current economic environment and running a methodical process, an Investment Banking firm can guide sellers in optimizing value; seek out their help! Business owners who employ an M&A advisor stand to significantly increase the value they may achieve by relying on expert advice. Sellers need to know what is compelling about their business from a third-party perspective and be prepared for due diligence. An advisor can assist with both and give an unbiased opinion of value while presenting the company in the most favorable light.
Excellent Communication
Good communication can shepherd the deal to a more efficient closing. It also fosters mutual trust. Tackling transaction impediments and deal-killing arguments head-on can turn major roadblocks into chances for a better relationship, and ultimately a better transaction. Disagreements or issues raised from buyers need to be understood so that they can be addressed and diffused or minimized while continually promoting the strengths of the business.
An experienced advisory team will have had numerous encounters of this nature and a wealth of experience to draw upon in resolving issues amicably. They will lead the communications and negotiations with the other parties on your behalf.
Negotiate Fairly and in Good Faith
For a transaction to close, both sides must have reasonable expectations and understand that a good deal is one that is fair to both parties. Buyers are often willing to negotiate deal terms, but be mindful that negotiations may require some give and take and the more terms you negotiate the greater potential for a lower price. Understanding the buyer’s interests can help you negotiate a deal that works for both sides.
The Bottom Line
Successfully closing a transaction can feel daunting. The process can take longer than you expect and some frustrations are inevitable. A skilled M&A firm can help you develop reasonable expectations and manage inevitable disagreements. Sometimes your advisor may tell you something about your business that you do not immediately agree with or want to hear. We recommend listening to them. If you’ve hired a good advisor, they should provide you with a candid and unbiased assessment of your company as it may be perceived by potential suitors. Heeding their advice can mean a smoother transaction that achieves more of your goals.
ABOUT WINDWARD ADVISORS
Windward Advisors, LLC is a sell-side, buy-side, capital raise, and corporate growth advisory firm. Windward specializes in helping business owners better prepare their businesses, with the intention of increasing shareholder value by providing strategic planning and corporate growth advisory services, and by representing owners in the execution of sales, acquisitions, and financial structuring transactions. Windward is an advocate of ensuring that business owners are knowledgeable about their alternatives and we work closely with other trusted advisors to assist owners with properly preparing before pursuing transactions.
Steve Howell showell@towindward.com and Barry Johnson bjohnson@towindward.com
Managing Directors
(804) 784-7191
www.towindward.com