3 Key Elements For A Successful Middle-Market Transaction
M&A success rates tend to be higher in large organizations mainly due to their ability to make continuous deals with experts who understand the process. For middle-market businesses looking at M&A options, the process can seem daunting. But, really, all that middle-market businesses need to do is to prepare more thoroughly than their supersize counterparts. In order to do this, middle-market businesses need to stay focused on three key components: a strong objective, an experienced team, and ironclad due diligence.
Setting an M&A Objective
The objective is the purpose driving the deal, so middle-market business owners need to make sure that they have set priorities and define what they want out of the transaction. Try to align these priorities with any co-owners or major stakeholders to ensure a smooth transaction process. Also, consider what kind of an M&A deal you’d be willing to make, and what the transaction will look like. Maybe you want to fully offload the business, and are looking for cash and a way out. But maybe you want to keep a stake in the company, or transfer equity from ownership into the acquiring business. Maybe you want to ensure a future for valuable employees, or even an entire team. Regardless, make sure you are thinking about what things are important to you early on, and which priorities you want to see in the resultant deal.
Experienced M&A Experts
Once you have your priorities in order and know what kind of deal you’re interested in making, the next step is to assemble your team of experts both internally and externally. M&A deals are complex, and gathering a team of professionals can mean the difference between making a deal or not. If possible, see if you can enlist the help of an M&A lawyer, a good accountant, and an M&A advisor.
An M&A lawyer can assist with accessing data needed for the transaction, from tax and employment information to data privacy and real estate. An M&A-specific lawyer is preferred for all of the details attached to M&A transactions since the less friction there is within the process, the better the deal can often be made. An accountant experienced in M&A is also crucial for a good deal since they advise on tax benefits of different structures, and can provide insights when it comes to analyzing the financial details of the buyer as well. And, finally, an M&A advisor can be an excellent asset to have a point person or liaison. A financial advisor can help shop the company to potential buyers, locate potential buyers, coordinate among all of the associated partners, and more. The three of these people will ensure that you get the best deal possible, as quickly as possible, and with the least amount of friction.
Detailed Due Diligence
Once the priorities are set and the team has been assembled, it’s time to prepare for rigorous due diligence. Interested buyers will want to see proof of the value of your business, usually first through a high-level analysis of the business and its finances. As long as the first analysis is successful, there will be several other rounds that will cover increasingly detailed areas. This could include information such as tax information, real estate details, business assets on hand, benefits for employees, security structures, corporate governance, and more. This is when your expert team can help you manage the process and get organized. To get a head start on data demands, put together as much as you can upfront and identify areas of high confidence as well as areas that need work. Think like a buyer and be ready to answer any questions that might pop up.
Let’s Get Started
M&A is complex, but not impossible, and getting a head start on the things your business needs to prepare can be a recipe for success. As you prepare to sell, work with Symmetrical professionals to ensure the best possible value. Please contact us for a confidential discussion of your specific situation. You will be in good hands as our team has experience helping business owners in various industries, sell their companies. From different industries to different locations, Symmetrical has relationships with lenders interested in lending and buyers interested in investing in new opportunities.