Insights

Working With an M&A Advisor

Last year’s articles have walked through the process of purchasing a company, viewed from the acquirer’s perspective. Before moving on to acquisition integration, let’s pause and look at how to work with your M&A advisor.

 

Role

M&A advisors can provide a wide range of services. Understanding the possibilities, and identifying which services are of greatest value to you, are critical to getting the most out of this relationship. Here we focus on those that are relevant to an acquiring company, listing typical services by stage in the acquisition process.

Strategy

  • Help sharpen client’s business strategy, and what it means for the acquisition approach
  • Define client’s acquisition strategy and its implications for target search, assessment, valuation and integration

Search and Assessment

  • Create long list of potential targets and apply initial screens
  • Identify more focused pool of potential targets, including companies not currently for sale
  • Conduct background research on target companies
  • Approach selected targets
  • Coordinate due diligence
  • Assist in due diligence

Valuation and Structuring

  • Assess the target company’s value
  • Arrange acquisition financing when needed
  • Structure the transaction
  • Negotiate the terms of the agreement
  • Ensure correct procedures and documentation

Integration

  • Identify integration priorities and risks based on acquirer’s strategy and due diligence findings
  • Advise on integration best practices

 

Selection

With many M&A advisors available, ranging in size from solo practitioners to major financial institutions, clients must be rigorous and discerning in their selection. We recommend that would-be clients:

Scrutinize an advisor’s track record. What transactions have they completed? Are these deals comparable to your own in terms of size, complexity, required expertise, etc.? What exactly was your potential advisor’s role – a junior, a rainmaker, project leader? Did they orchestrate the work, manage the client, lead the negotiation? How much buy-side experience do they have?

Learn about the advisor’s company. Visit their office. Is this an individual, a dedicated M&A shop, a division of a much larger business? What is the compensation structure, and does it indicate top tier people? To what extent is the firm investing in people, resources, databases, relationships?

Understand the advisor’s deal philosophy. Do they share your objectives? What are their strategies for achieving them? How do they approach negotiations? How do they deploy their influence and expertise? What is their reputation in the industry?

Ultimately it comes down to trust. You want to find an M&A advisor whose knowledge, skills, judgment, and integrity you can count on. A partner you feel secure working with.

 

Working Together

If you have made a good selection, working with your M&A advisor is fairly straightforward. Like in any other effective partnership, you need to:

Share information. Communicate. Share company data quickly and accurately. Work with your advisor to complete necessary pieces of analysis. Be transparent about issues that might affect your ability to successfully complete and integrate an acquisition. Be open about your desires and concerns for this deal. If something changes – a financial result, dissent in your leadership ranks, a piece of industry news – let your advisor know.

Define your respective roles and let your M&A advisor do his/her job. As outlined above, there are many things an M&A advisor can do for you. But what do you need? What services will best complement your internal experience and resources? Of course, responsibilities can evolve in the course of an engagement. But having identified the areas where you want your advisor to take the lead – e.g., approaching target companies, coordinating due diligence, negotiating – you need to take a step back and let it happen.

Like a good lawyer, banker, or accountant, your M&A advisor can be a trusted partner, helping to ensure your company’s long-term growth and success. Choosing well and then investing in the relationship can pay great dividends.

In the next article we will return to the acquisition process, focusing on the final – but critical – step of integration.

 

 

For more information, contact:

Douglas Nix, CPA, CA

Chairman

E/ dnix@stillwatercapital.ca

T/ 905-845-4340 x.211

Stillwater Capital Corporation

2010 Winston Park Dr, suite 401, Oakville, ON L6H 5R7