Mergers and acquisitions (M&A) can be complex and high-stakes transactions for companies. Having the right M&A advisor by your side can make all the difference in ensuring a successful deal.
M&A advisors provide invaluable guidance and expertise through every stage of the process – from initial strategy development to valuation, negotiation, due diligence, and post-merger integration.
According to Deloitte’s analysis, companies spent an unprecedented $5 trillion on M&A in 2021, with more than $8 trillion worth of deals announced in 2021–22, underscoring the prevalence and importance of these transactions.
With so much on the line, finding an M&A advisor who is a good fit for your company’s specific needs and deal objectives is critical.
Here are ten key qualities to consider when hiring an M&A advisor:
-
Relationships with Strategic and Financial Buyers
Your M&A advisor should have established relationships with strategic acquirers and financial buyers (private equity firms) in your space. These connections give the advisor insight into buyer appetites, priorities, and processes.
With strong buyer relationships, they can run a targeted, efficient sale process to achieve an optimal assessment and terms.
Prioritize an advisor who already has connections to the most likely buyers for your company. Their ability to tap into their network will generate strong buyer interest and bids. Existing relationships lead to a more streamlined sales process and better terms.
-
Relevant Industry Experience
Ideally, your M&A advisor should have significant experience in your specific industry vertical. They will have keen insight into industry trends, competitive dynamics, valuation benchmarks, potential buyers and investors, and regulatory issues that could impact the deal.
Industry expertise is key to marketing the deal effectively and adding maximum value during negotiations.
For example, Investment Banking & Valuation’s Business Services Practice is known for leveraging deep sector expertise in business services to enable more successful transactions for clients ranging from facilities management to HR services.
Their hands-on experience and personalized approach in the industry can serve as a guiding model. Look for an advisor who has completed multiple deals in your industry over the past 5-10 years. Their extensive experience will provide valuable perspectives on positioning and structuring the deal for success.
-
Full-Service Capabilities
Look for an M&A advisor that offers full end-to-end support throughout the transaction. This includes developing the deal strategy, preparing selling materials, running a structured sale process, valuing the company, negotiating terms, navigating due diligence, and advising on post-merger integration.
A full-service advisor quarterbacking the entire transaction will help ensure seamless execution.
Seek an advisor who can provide comprehensive guidance from start to finish, including post-merger support. Having one advisor coordinate the myriad complex aspects of the deal will ensure cohesive messaging and strategic direction. Their holistic involvement creates efficiency and continuity.
-
Experience Advising Both Buyers and Sellers
Choose an M&A advisor with experience on both the buy-side and sell-side. Advisors who have advised acquirers will have a valuable perspective on how buyers evaluate deals and negotiate. This dual-sided experience helps the advisor craft a deal strategy tailored to achieving buyers’ goals, thus expediting a transaction.
Look for an advisor representing strategic and financial buyers in previous deals. Their multifaceted experience provides unique insights into how different buyers assess M&A opportunities. This will enable them to craft the most compelling value proposition and deal terms for potential buyers of your company.
-
Proven Deal Execution Track Record
Review the M&A advisor’s historical deals in your space to assess their capabilities. Look for consistently positive deal outcomes, such as full sales processes run, strong buyer pools generated, and transactions completed at optimal valuations and terms. An impressive deal track record indicates the ability to deliver results.
Scrutinize the advisor’s completed transactions to ensure a high success rate in securing strong buyer interest, deal completion, and optimal terms. A proven history of surpassing clients’ expectations demonstrates their ability to execute amid complex negotiations and shifting dynamics.
-
Creativity in Deal Structuring
The ideal M&A advisor thinks creatively about the deal structure, for example, using an earn-out to bridge a valuation gap.
Seek an advisor who brings innovative ideas to the table, not just standard M&A templates. Imaginative deal structuring can align divergent interests between buyers and sellers, such as seller financing, collars, or contingent payouts.
-
Cultural Fit
Consider cultural fit when choosing your M&A advisor. You will be working closely together under pressure, so strong interpersonal chemistry is key. Ensure your advisor listens attentively, clearly communicates, has integrity, and establishes trust and respect. This way, you can partner effectively to execute a successful deal.
Meet with potential advisors in person to assess communication style and personality dynamics. You want an advisor who asks thoughtful questions, provides clarity, and has a collaborative approach. An advisor who is a good cultural match will lead to a smoother, more successful engagement.
-
Experience Navigating Complex Deals
If your transaction involves complexity, such as carve-outs, cross-border deals, distressed sales, or public company transactions, look for an advisor with specialized experience advising these types of deals. Their expertise will prove invaluable in steering a complex deal to completion.
For complicated deals, choose an advisor with specific expertise in handling the intricacies those situations entail. Advisors experienced with complex deals know how to mitigate key risks, satisfy stakeholder interests, and keep transactions on track through volatile conditions. Their know-how is indispensable.
-
Global Experience is Excellent
For cross-border transactions, work with an M&A advisor with global reach and local teams on the ground where you buy or sell. They will understand regional market nuances, M&A environments, and other regulatory issues.
When expanding into new geographies via M&A, your advisor should have experience dealing in those regions. Local team members provide critical on-the-ground intelligence and relationships to navigate foreign deal complications.
Conclusion
Choosing the right M&A advisor is one of the most important decisions you will make in determining the success of a transaction.
Finding an advisor who meets the above criteria will provide excellent guidance and maximize your chances of achieving your deal objectives. With an experienced, skilled M&A advisor as your close strategic partner, you can pursue transactions with confidence.
