M&A activity – whether buying, selling or merging – has always been a strong complement to business success, and in today’s slow-growth economy, it moves centre stage.
The current market trends demand companies to constantly change in pursuit of competitive advantage, and although the M&A world is only one piece of the economic cake, it is one of the most important pieces. Agility is key, along with a strong, strategic M&A capability, having absolute clarity on what to acquire, how and when or when and how to sell.
Due to the technical nature of M&A, advice tends to focus purely on the “how”; yet the best conversations start with the “why” or the “what ifs” – the motivations and stories behind strategic M&A.
The stories are nearly always very personal, concerning themselves with life journeys and success stories than merely the acquisition of further wealth and capital. Many business leaders are on a build, buy and sell strategy with the goal of building a legacy. It can be as much about achievement and fulfilment, both financial and personal as it is strategic.
For those on this M&A journey in pursuit of achieving this legacy; personal questions need to be answered:
• What is it I’m seeking to achieve?
• How will I achieve that?
• What acquisitions will accelerate progress?
• Is family succession important to me?
• What are my financial goals?
• When should I ‘cash in’?
• What will I do afterwards?
The definition of these motivations, the “whys” and “what ifs”, become the foundation on which to build the “how”, to best do the transaction – a recipe for success. Each step of the journey needs to be supported by its own, well articulated, strategic logic.
Acquisitions will ideally encompass the four corners of strategic M&A – economies of scale, synergy, shareholder value and market disruption. Today’s market demands additional spectrums, such as improving the performance of the target company and securing new products or skills, however it is these four corners that remain absolutely critical to strategic M&A deals.
When exiting a business, personal motivations gain momentum. It’s not just purely about how to maximise the value pre-sale by ensuring recurring revenue, building a strong brand with sustainability and growth prospects; there are also, more individual elements to consider. Does a sale truly realise my ambitions? How should I invest the proceeds effectively? What next; retire, start afresh as a serial entrepreneur or business angel investor?
Whilst the process and technicalities of M&A are important; the “whys” and the “what ifs” are equally critical to achieving success. The deals that create better companies, the personal journey’s behind the deals and the long term effects on employees and their future are the true centre stage.
Avondale is a multi-disciplinary corporate advisory practice, providing bespoke advice and strategic expertise in Business Sales, Mergers and Acquisitions, Strategy and Corporate Finance.
If you are looking to sell or buy a business, call us today on 02077888250 or, alternatively, fill in our contact form and a member of our team will be in touch.