MAXIMIZING THE VALUE OF THE M&A PROCESS

The M&A process takes time and money. A Managing Director at Morgan Stanley said during analyst training: “The M&A process is like building a city in a month and then blowing it up.” He warned the new analysts that we would spend hundreds of hours on work that would be used in a single meeting—or not at all. Indeed, this proved true. After working all night on a presentation for a potential buyer of one of our clients, I remember the Managing Director telling us to leave the presentation books at the office because the agenda had changed.

The good news for M&A targets is that M&A can produce lasting value in your organization, if you plan and execute your process correctly. Here’s how:

1. Get your virtual data room in order. Creating a virtual data room will be useful for buyers and investors, but it can also become an ongoing resource for your company. Updating your virtual data room every quarter gives you a current, easily accessed snapshot of the company, allows better collaboration and participation in maintaining corporate records, and accelerates preparation for board meetings.

2. Seek outside perspective. Strategic M&A discussions provide an independent perspective on the value of the company’s products, customers, revenue model and long-term strategy. This is your chance to find out who, outside of your organization, sees value in your company, and why. It is also your chance to question the sacred cows, the pet projects, and the internal agendas that can push your strategy out of alignment with the market reality.

3. Explore others’ strategies. Would you like to schedule meetings with the CEOs of other companies in your sector and have them tell you about their strategy? M&A dialog goes both directions; as you explore the potential fit with partners, you are also learning about their strategies.

4. Nail your story. You will work hard to refine your story for buyers and you will get better at it. After your third or fourth management presentation you will become crisp and concise and impactful. This new story, forged in the crucible of M&A, will transform your sales and marketing. It will make its way into the unique selling proposition that your sales team takes to market.

For more on this topic, check out our presentation to Midaxo Academy on Briding the Gap in M&A. Midaxo makes a platform for running buyside engagements, and our presentation includes reference to the modern tools for organizing the M&A process and creating residual value.