Tag Archives: M&A

Where Does the M&A Advisor Add Value?

We surveyed private company sellers after their deal was done to gain insight into what was important to them and to better understand the selling process through their eyes.  While we are located in the Research Triangle Park area of North Carolina, we leveraged our national network of contacts to gain broad perspective in a variety of industries and states.  Below are a few statistics that might help you as you think about selling your company (or helping your client in the process):

Number of survey participants 63
Years in which companies were sold 2010 – 2014
Industries represented 18

As you can see from the chart below, companies representing the lower-middle and middle market participated, with revenues ranging from a few million dollars to nearly $250 million.

hrp-survey-demo-081314

 

So where did the advisors add value?  That’s the chart below, ranking the area of value-add by highest or most value to lessor.  As you can see, the highest ranked areas were about the credibility attributed to the seller based on the advisor’s credibility coupled with leading the process and having an understanding of the transaction to negotiate on the seller’s behalf.  On a combined basis, these should enable the seller to achieve value that they might not otherwise have realized on their own.  Contrasting the value of legal counsel in the negotiating process, a M&A advisor should be able to assist in structuring the economic elements of the transaction to optimize the deal for you.  Surprising to many sellers is that “finding or identifying the buyer” is not on the top of the list.  It is important, and there should be solid process for understanding the logical buyer groups and who the key players are in each; however, actually contacting and get to the buyers is much easier in today’s environment than you might expect.  What is not so easy, is getting through their filter as a viable acquisition target ….in our view, this is why credibility of the seller ranked higher.

hrp-survey-value-081314

Two additional areas of value add are worth noting.  First, preparation for the sale process is so critical and relates directly to credibility.  A key concept above all is elimination of surprises to the buyer.  Surprises Kill Deals!  It is better to spend the time, understand the issues and opportunities specific to your company, and proactively prepare and address them at the right time in the process.  The second and last area of value add in this post deals with communication and negotiations. Private equity and strategics are the two main groups of buyers.  In both cases, management needs to preserve and build their relationship with the buyer as the process gains traction.  Invariably there will be tough issues to be communicated and tackled.  The M&A advisor should be able to run interference for management on the difficult and contentious issues, allowing the seller to preserve their goodwill in the relationship. Having a third party push on these deal points also gives the seller a fallback if the advisor pushes too hard.  After all, you can always fire the deal team …you can’t fire yourself as the seller.  So what you say is hard to retract.

I realize that this is self-serving, but we found in the comments, consistent feedback from experienced sellers indicating that they use a third part to facilitate their transactions.

MoneySoft President reviews Marks’ book “Middle Market M&A”

 

Middle Market M&A

Book Review

Middle Market M&A: Handbook for Investment Banking and Business Consulting was written by Kenneth Marks, Robert Slee, Chris Blees and Michael Nall and published by John Wiley and Sons. None of the authors are strangers to middle-market M&A.

There are numerous books that deal with mergers and acquisitions. Does the body of literature about M&A really need another book? Is this just a rehash of the same-old, same-old? Does Middle Market M&A has something fresh and useful for the reader?

Any book that facilitates sound dealcraft is a welcome addition to the body of M&A knowledge. The Middle Market M&A handbook is a worthwhile addition.

One of the decided differences about Middle Market M&A compared to other works is its unambiguous focus on the middle market written by practitioners who live it. Its voice is clear and that is refreshing.

The book articulates the middle-market mindset. It’s not about main street—mom and pop businesses. It’s not about Wall Street Megadeals. However, practitioners of both can find fresh perspective on the middle market. Moreover, mid-market acquirers and sellers will benefit from this work by gaining a deeper appreciation of the M&A process and the mindset of the intermediaries who specialize in the market’s unique needs.

This publication reflects the continuous evolution and maturity of the middle-market advisory and transaction specialist. Much of its richness is drawn from the material and shared experiences of the instructors and students of the Certified Merger and Acquisition Advisor (CM&AA) certification offered by the Alliance of Merger and Acquisition Advisors (AMAA).

Middle Market M&A steps the reader through the M&A process and market—both domestic and global. But the book is more than a technical treatise on deal making. While it includes a great deal of technique and operating knowledge, one of its most valuable characteristics is that it provides a “market perspective.” The book’s content is more accessible because of this context.

Much of this market perspective is inspired by Rob Slee’s work on Private Capital Markets, an area that is under-covered in the business press and our educational system. Not surprisingly, Rob Slee is one of the book’s authors.

Given its size, the Middle Market M&A handbook can’t drill down into the subject matter, but it does provide an excellent overview and framework for mid-market dealcraft. It’s well organized and a dealmaker can refer to the sections that address the challenges they are facing at any given stage of the deal process.

If you are in the middle M&A market—whatever the role—this is a book you will want to read and keep handy.

Robert Machiz,
President
MoneySoft, Inc.

MoneySoft, Inc. was founded in 1991 in Phoenix, AZ. The company creates and publishes specialized software productivity solutions for fixed asset accounting, business valuation and evaluation the economics of middle-market merger and acquisition situations.

©2013 MoneySoft, Inc.