Top 5 reasons to consider a dual-path approach to financing vs M&A

With current market volatility and recessionary pressure, CEOs should consider a dual-path approach when initiating a financing round.  As the name implies, a dual-path approach involves outreach to potential strategic acquirors while also pursuing the next round of financing.

There are many reasons this approach makes sense. Here are the top five:

• Gives you more options to consider exit valuation vs further dilution and the time required to get back to the equivalent value.

• Reduces risk in case financing is not available at the valuation you want.

• Lets potential acquirors know that you have a pending event which will drive them to a timely yes/no on making a bid.

• Strategic partner outreach can result in partnerships to enhance growth or a secondary investment in your round.

• Validate your market position regarding curb appeal to acquirors while gaining valuable exit preparation.

A thoughtful approach is required to effectively run a dual-path process. The outreach to potential acquirors can be framed as business development, then allow the M&A discussions to evolve if there is a good fit.   In the dual-path approach, the company doesn’t want to broadly indicate ‘we are for sale’. This allows the financing to be the ‘main event’, while a carefully orchestrated strategic partner outreach is done in parallel.

Free Webinar: How to Run a M&A Readiness Assessment

Join Mark Upson, founder of NextPath Advisors for a free webinar with case studies sponsored by the Alliance of Angels, on October 24th.   Mark will elaborate on the above topic and provide case studies of successful M&A transactions.  K&L Gates will co-host this AoA webinar along with Mark. Register here.