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 demands companies to constantly change in pursuit of competitive advantage. 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 and about life journeys. Many business leaders are on a build, buy and sell strategy with a goal of building a legacy. It can be as much about achievement and fulfilment, both financial and personal as it is strategy.
For those on this 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?
• 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.
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”, the “what ifs” are equally critical to achieving success. The deals that create better companies or the personal journey’s behind the deal 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 01737 240 888 or alternatively, fill in our contact form and a member of our team will be in touch.