September 13, 2023 //
If you’ve read Stillwater’s previous series on the Steps to Selling Your Business, you’ll know that the three-step process is the same for sellers and buyers.
Those who read that series will also know that, for the seller, the preparatory phase is a daunting one. The financial disclosure expected of a seller is nearly forensic in detail; every point in the company’s story and history is scrutinized, and the volume of information that must be compiled, analyzed, and packaged is staggering.
You’ll be happy to hear that for the buyer, the first step is much less harrowing. Quality M&A Advisors will apply the same stringent standards to your preparatory stage, but what’s demanded from you is far less complex and invasive.
By the end of the preparatory phase, as you begin to move toward market outreach, you and your advisors should have three things in perfect condition and ready to be deployed:
Comprising an analysis of your financial and operational capabilities, a picture of your ideal acquisition type, and the current conditions of the markets you’re surveying—a strong, clear Acquisition Strategy is the playbook that keeps you and your team on-mission for the duration of the process. Sticking to a carefully delineated strategy will optimize conditions for reaching your goal as quickly as possible with as few compromises as possible. Your Acquisition Strategy is a driving force from beginning to end; choose advisors who prioritize it.
We develop an internal, eyes-only master document that summarizes your whole story and outlines your attractiveness/value as a buyer. A master story like this keeps everyone on message and enables your advisors to tell your story to potential sellers as powerfully as possible. It’s got everything they need to know to present you to the market as a serious, quality opportunity worth looking at.
From the summary analysis that the document provides, we can custom package your story to appeal to each prospective seller, highlighting the particular strengths we know will appeal. The story your M&A Advisors tell the world is only as good as the story they’ve taken the time to learn. This master document makes it effortless.
Surveying the market through the filtered lens of your Acquisition Strategy, we might surface an initial list of 100-150 names of suitable prospects. Further refining and filtering will bring that list down to a more manageable 25-30 by the end of the preparatory stage. If your M&A Advisors have put good procedures and tools to work, those 25-30 names will have some or all the qualities you seek in an acquisition.
As I said, this stage is much less of an ordeal for the buyer than for the seller, but they are all critical components you need to have in immaculate condition before you proceed further in the acquisition process. As you begin, so you will end, so make sure your team of advisors thoroughly completes this work before the next stage begins. You want to keep things moving, but you have the time to ensure your preparations are done right.
Skilled, experienced M&A Advisors will keep the process moving smoothly throughout the preparatory stage. How long this stage lasts will differ according to the client’s specific situation, but in general, you can expect to move into the Market Outreach phase about 2-3 months after you begin.
Take the time to do some of the suggested preparations and planning company-side in advance. The formal preparatory stage with your M&A Advisors will be streamlined and simplified if you do.
It’s never too early to begin the conversation about the acquisition process. Bring us your questions here.
Written by: Douglas Nix