Experienced and successful buyers will have a strong team they rely on to execute their acquisition strategies. Their teams commonly consist of:
- Investment banker – helps find and evaluate candidates and take the lead during most of the negotiations.
- Accountant/CPA – will lead financial due diligence, advise on tax-advantages to deal structure and work with the banker and attorney.
- Attorney – leads the legal and HR components of due diligence, works with the CPA to document a tax-advantaged deal and prepares the definitive purchase agreement and related documents.
- Industry Expert – evaluates the target company business and financial profiles.
- Finance Expert – arranges any necessary financing.
These individuals/organizations work together harmoniously and will frequently create value that far exceeds the anticipated returns of the transaction. Value maybe produced through deal sourcing, structure, tax considerations or even advice to avoid a deal, a team of experts can prove invaluable.
Once the objectives and acquisition team are identified, an acquirer can begin sourcing deals. As an acquirer, reputation in M&A has a special role. An attractive target will often accept the offer most likely to close rather than the highest offer. Proprietary deals are highly advantageous as an acquirer, however they are rare in today’s marketplace. Which means, most M&A transactions will have multiple bidders. Tire kickers, bargain hunters and window shoppers will quickly gain a bad reputation and end up wasting time and resources in the deal sourcing process. Once the target is identified the process of offer, negotiation and due diligence begins. It is at this stage when reliance on intuition rather than systematic analysis can distract an acquirer.
