Buying well, selling well and due diligence to accelerate growth and maximize value
When thinking about your M&A strategy, a focus on the right capabilities that create value is critical. The end results are seamless deal execution, synergies captured during integration, value delivered to stakeholders and meeting corporate objectives.
As we move out of the pandemic, dealmaking remains an extraordinarily efficient way for many organizations to get the skills, resources and technology they’ll need to create value in the world of tomorrow.
Our integrated approach increases value over the deal life cycle
To ensure speed and certainty of execution without increasing investment risk, strategic and thesis development work should start even before an opportunity is identified. A clearly defined and verifiable investment thesis helps focus due diligence and can be translated into a view on value.
Understand a company’s history and financial performance, including its strategy, business model, markets and competitive environment. Use this knowledge to evaluate value creation opportunities and risks.
The process of evaluating deal risks and opportunities should be more than ticking a box when the sales and purchase agreement is signed. The best investors formulate a value creation plan throughout the process and then rely on their ability to execute on that plan when valuing and bidding on the target company.
A well-defined governance and decision-making structure helps increase efficiency and cost control. A strong leadership team able to coordinate the activities of a wide range of complex stakeholders is crucial to an acquisition. Identify deal team members and assign clear individual responsibilities.
Start discussions early: adjustments to enterprise value and the related sales and purchase agreement language can become a sticking point in negotiations, especially if left too late in the deal process. The sales and purchase agreement should be appropriately worded to reflect the results of due diligence and protect investor interests.
After the deal closes, focus on getting bottom-line results to increase value. Start with identifying an integration strategy and roadmap across business functions and geographies, including “day one” priorities. Value creation should drive resource allocation.
People and cultural issues can be a challenge to creating value after an acquisition. Decide who transitions to the new business model and develop a plan to keep and incentivize top talent. Once a deal is announced, focus on communication to reduce disruption in the workplace.
Our approach is designed to anticipate and address investors’ needs and concerns
Strategic assessment of the business being sold is complex, and preparation can take time. We often see issues emerge during buyer due diligence that should have been identified and addressed during preparation. Identify the key deal issues during planning to make sure there are no surprises or deal breakers.
There may be an opportunity to optimize the cost base and strategy of your business pre-sale. Early execution of improvement plans will be reflected in the baseline financials and valuation. It’s important to identify trade-offs between timing and value.
Be clear on the governance and decision-making structure from the outset to increase efficiency. A sale or divestiture requires a strong leadership team with access to information and the ability to coordinate a wide range of activities and stakeholders in a high-pressure environment. Identify the deal team members and assign clear individual responsibilities.
Engaging with management is critical to developing credible, bottom-up plans and executing effective, efficient data collection. Maintaining performance through the transaction period and keeping momentum post-sale is key, as these are factors bidders will price off.
Decide who transitions to the new business model and develop a plan to keep and incentivize top talent. Consider business-as-usual needs to avoid a dip in performance. Be aware that once a deal is announced, a lack of communication can cause disruption in the workplace.
Identify and agree on what information will be provided to bidders. Define what’s in scope or excluded as part of the transaction. Anticipate bidders’ needs: the perimeter for sale, the plan for transaction and the post-sale potential for value creation.
Develop a realistic timeline—know the critical path and rigorously manage against it to increase speed and focus. Consider team bandwidth, including project management, deal process and resource allocation, as well as interdependencies between workstreams and projects. Make sure time is allocated for any union or workforce consultation requirements.
Determine the impact on the retained business from sale, and identify and plan for dealing with stranded costs. Fully consider the implications of trailing liabilities and associated activities.
“Today’s deal environment is fast and complex. We help clients bring their future into focus by delivering transaction opportunities and navigating the often unpredictable path to deal success in distressed situations.”