The 3 Components of a Winning M&A Team
The key to a successful merger or acquisition is a well-vetted group of advisers and attorneys.
- By Mike Harvath
- March 16, 2017
One of the most unnatural acts in business is a merger and acquisition (M&A), which is why outside help is so important. There are three legs to the M&A stool. To get a good deal done, you need an M&A adviser, a tax adviser and an attorney.
The worst possible scenario for you would be to engage a business broker or investment banker who simply gets the deal done and runs off into the sunset once the ink is dry and the M&A is done.
What happens is these M&A advisers have no skin in the game once the payday has happened, leaving you and your team to struggle with how to navigate all the post-merger activities. Having someone who's in your corner to advise you is absolutely critical.
A great M&A adviser will actually show you exactly what to do by sticking with you through months of painstaking negotiations, through meeting after meeting and when you're completely spent.
A great M&A adviser will walk you through the tactical stuff that you need to accomplish so that you can lead your new enterprise in the right direction. They'll help you get through the tough times, do the heavy lifting and even be the diplomat when needed.
They'll help you get through the due diligence process, build a healthy balance sheet and help you best understand how much you can afford to buy, assuming you're on the buy side of the M&A coin. A great M&A adviser will get you a solid valuation, and guide you through the murky waters of determining how much you can buy (or sell) in the M&A process.
A great M&A adviser will help you develop a financial roadmap, and craft what an ideal prospect looks like, in order to acquire. They'll teach you about valuations, help find a suitor that fits the criteria for the best possible outcome, and steer you away from doing business with the wrong company.
A great tax adviser is all about saving you money, especially when structuring the M&A deal. The wisdom and advice you get from a great tax adviser will help the overall finances be the most efficient.
We've seen situations where tax advisers can make a pretty big dent in savings, up to 20 percent. They're smart, creative, and focused on your finances and growth.
Attorneys in the M&A process should be about one thing: risk mitigation. That's it.
Their only role should be to structure the deal, legally. One of the common mistakes that we see is when tech companies confuse the attorney's role for that of an M&A adviser. We often find attorneys will give advice, but their wisdom is limited because they rarely do M&A transactions for technology companies. They'll base their limited knowledge on M&As from other industries and verticals, such as manufacturing,. Limited knowledge from someone who isn't an industry expert leads to poor advice.
Most lawyers don't have deep enough experience in your industry, and can't often weigh in because of the lack of experience. And this isn't a criticism of attorneys, it's just the truth.
Ideally, you want to engage an M&A firm that works with lawyers who have experience in your industry. Otherwise, you risk blowing up your deal. You can't compare other industries to IT services. You want to know these gaps and work with your attorneys accordingly.
In the end, make sure you're not penny-wise and pound-foolish. In other words, don't be extremely careful about the small amounts of money while disregarding the larger sums. You need all three legs of the M&A stool to make an M&A deal work.
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Mike Harvath has spent his entire 30-year career advising partner companies on implementing winning growth strategies and facilitating mergers and acquisitions. As president and CEO of Revenue Rocket, he and his team have advised over 500 partner companies on reaching their growth goals.