How To Pick the Right Partner for M&A

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Selecting the right buyer enables you to complete your exit confidently and successfully. This means snagging an acquirer that’s set to close the deal and take your legacy to the next level. 

But picking a merger and acquisition (M&A) partner isn’t as simple as saying yes to the party offering the best price. You’re essentially getting married to the people behind this other entity. So you should only give your yes once you’ve considered vital factors like vision alignment, buyer experience, and compatibility.

While it may sound cheesy, you have to look for the following qualities (usually desired in a romantic partner) in a potential partner and save yourself from devastating, if not heartbreaking, consequences post-close. 

Look for an M&A partner that…

… understands your vision.

As the business owner and/or founder, you have a plan for its future direction. Both parties must listen and agree to this vision. If a buyer disregards and disagrees with your vision, they’re not the right match. It is a sign they will acquire your business and do what they want with it, which may not align with what you want and need. This lack of synchronicity can lead to the failure of the deal post-close.

…makes you feel excited for your company’s future.

The ideal match makes a seller feel excited. Many owners have spent years and years in their business, and they sometimes become bored with the same thing day in and day out. A buyer, together with a vision for growth, reinvigorates them and gives them something new and stimulating to focus on. 

Alignment is more than just sticking to the terms of the agreement. If you decide to stay, you would feel renewed energy if the buyer agreed to pursue your goals and plans, entered into a strategic collaboration, and allowed you to become a part of the company’s executive management.

…respects your input

M&A must be built on mutual good faith, trust, and respect. If parties are not at the table in good faith, then the process is over before it begins. 

…has deep pockets and a long track record. 

Buyers need to be well-funded and pay top value for good assets. Anyone who doesn’t have the financial resources or wants the seller to finance a large portion of the business is not a real buyer. Sellers want someone who will maximize the business post-close, and they only want to work with folks with a proven track record.

When looking for an M&A partner, remember that…

…sometimes opposites attract, even in business.

Sometimes a buyer is looking to enter a new market, offer a new product/service, or obtain new clients. So, the value lies in bringing together companies that may not be immediately compatible on paper. But this strategic value can be very high. That said, in M&A, you want someone more in line with what you need as a seller and where the business can go in the future.

…there are plenty of fish in the sea.

This is the biggest mistake sellers make. They think there are many buyers for their company, so they can find one anytime. This is not the case at all. While there is competition for good assets in today’s market, that won’t always be the case. Remember that someone interested today may not be interested tomorrow – strategies change quickly and often.

…when you know, you know. 

Trust but verify. Sometimes the right buyer is immediately apparent from the beginning of a process. A well-run M&A process typically results in the best buyer jumping out in front early on. That said, due diligence is important on both sides, as first impressions can be misleading. 

…you shouldn’t judge a book by its cover.

There is more to a deal than just financials, so this is an apt metaphor. Valuation starts with financials, but intangibles such as workforce, management, clients/customers, geography, etc. are all very important and will increase value accordingly.

…you should know what you bring to the table.

Sellers must know what they want individually and where the business can go/grow BEFORE entering the M&A process. If you don’t know who you are, the value you have, and what you want, then you won’t be able to know if offers are reasonable. 

To sum it up, the most important things to look for in an M&A partner are someone who aligns with your vision, wants you to succeed, and offers to pay top dollar for your assets.

On the other hand, potential red flags include lack of transparency and communication, inability to move quickly and accordingly based on the process timeline, and inadequate funding.

Create a buyer list and narrow your option to the most viable one. But while you can perform this on your own, Align is here to help make this step efficient for sellers. On top of getting you the most lucrative valuation, we assist you in finding the right buyer for your business. 

Talk to us today on how to get started.