6 key factors for selecting an M&A advisor to help you sell your Company
We asked this question to company leaders to get their insights. From deep experience to how many contacts they have in the financial industry, here are six answers to the question, "As a tech company leader, what are the most important attributes to look for in an M&A advisor to help a company achieve an exit?"
Tailors their Approach to Company Goals
Possesses Excellent Soft Skills
Rapidly Problem-Solves
Thinks Well Analytically
Masterfully Negotiates
Has Many Contacts in the Financial Industry
Tailors their Approach to Company Goals
Matt Gehring, Chief Marketing Officer at Dutch shares his insight on the importance of company goal alignment. He shares “Look for an advisor who has a strong network of industry contacts and can provide insights on market trends and potential acquirers. An advisor's negotiation skills and ability to effectively communicate the company's value to potential buyers are also critical attributes to consider.”
Advisors with CxO experience in your domain are best suited to help you navigate the M&A process. Additionally, the advisor should be able to understand the company's products and market, and tailor their approach accordingly with potential acquirers.
Matt added, “They should also have knowledge of the legal aspects of M&A transactions, and have experience in managing the due diligence process. Their ability to lead the negotiations and ensure a smooth closing process is also important.”
Possesses Excellent Soft Skills
Piotrek Sosnowski, Chief People & Culture Officer at natu.care believes that M&A advisors shouldn’t be judged solely on hard skills. He shares “Mergers and acquisitions are complex transactions, both financially and emotionally. This means that in this field, advisors need more than just financial knowledge to be successful.
To navigate the various stages of an M&A transaction, an advisor must possess a range of soft skills related to areas such as communication, negotiation, conflict resolution, strategic thinking, and interpersonal savvy.
M&As often decide the fate of years' worth of work, personal attachments, ambitions, and entire life stories. This means that these processes can be terrifying, draining, and filled with ego battles and broken hearts.
To smooth out and soften such issues, M&A advisors need impeccable people skills. Without them, even the best financial understanding won't be enough to make a deal successful.”
Rapidly Problem-Solves
Ludovic Chung-Sao, Lead Engineer and Founder of Zen Soundproof stresses the importance of rapid problem-solving. He states “Being able to identify and remedy issues quickly is essential in a complex process like M&A deals. The most successful advisors are those that can take a flurry of plausible scenarios into account and create solutions designed to maximize value while maintaining the best interests of their clients.”
If the M&A advisor has deep domain knowledge, for example in B2B Software as a Service, this combines with creative problem solving to help yield the best outcomes. With strategic acquirers, you are looking for that 1 + 1 = 5 value proposition to get the best deal.
Ludovic elaborates on the ways that problem-solving advisors benefit founders like himself, “Rapid problem-solving allows advisors to look out for potential red flags early on and proactively deal with them in order to minimize any surprises down the line. While there are many skill sets required for success in M&A advising, this one has been important in my experience.”
Thinks Well Analytically
Annu Daniel, CEO of Elohim Company shares why analytical thinking is crucial for advisors. She shares “Analytical thinking skills are a must for any M&A advisor. The complexities of any M&A transaction require the assessment of massive amounts of product, market and financial data. Not only that, but measurements need to be precise and several valuation techniques may need to be tested out to find the most useful one. Being able to think analytically about this information is critical to getting the most accurate results.”
Lastly, if the M&A advisor has the expertise to help the company show how its products, people and market focus help the acquirer company grow, it will increase the valuation greatly.
Masterfully Negotiates
Matthew Ramirez, CEO or Rephrasely emphasizes the importance of finding a master negotiator. He states that “An M&A advisor should possess the negotiation skills to cover the entire process. In a merger or acquisition, the advisor will need to negotiate with the company being acquired. They will need to determine the value of the company and what the price should be.
They will also need to negotiate with the company doing the acquisition. Then, determine what assets will be transferred to the acquiring party, and what will be kept by the company being acquired. Finally, the terms of the contract, including things like warranties and indemnities, will also need to be settled.”
Has Many Contacts in the Technology and Finance Industry
Jeremy Reis, Founder of Million Tips shares his thoughts on what a tech leader should look for in an M&A advisor. He shares “As a tech company leader, it is important to look for an M&A advisor who has experience and expertise in the technology sector. They should understand the nuances of the industry and how different components can impact your company's exit strategy.”
With deep industry knowledge, the M&A advisor can explain why the company's products and services will add significant value to the acquirer’s business over time.
Jeremy continues to share the ideal qualities to look for in M&A advisors. He states “They should also have great analytical skills to help make sound decisions under pressure. Strong negotiation skills are essential so that they can achieve the best possible deals. Most importantly, in this economy, your M&A advisor should have contacts within investment funds and banks to ensure there is enough capital to make a smooth transaction.”
The NextPath Advisors team has helped several clients effectively manage a dual-path process with proven results. Click below to schedule a free consultation.
And because inquiring minds want to know - here are 6 considerations offered up by ChatGPT.
Industry expertise: Look for an advisor with a deep understanding of the technology industry and its trends. They should have experience working with companies similar to yours and be able to provide valuable insights and guidance on the M&A process.
Transaction experience: Choose an advisor with a track record of successfully completing M&A transactions in the technology sector. This should include experience with both buy-side and sell-side transactions, as well as experience with cross-border deals.
Strategic thinking: A good M&A advisor should be able to provide strategic guidance throughout the entire M&A process, from initial valuation to due diligence to negotiations. They should be able to identify potential acquisition targets, assess their strategic fit, and advise on integration planning.
Strong communication skills: Look for an advisor who can communicate complex financial and strategic concepts in a clear and concise manner. They should be able to effectively communicate with all parties involved in the transaction, including shareholders, board members, and potential acquirers.
Trust and integrity: Choose an advisor with a reputation for honesty and integrity. M&A transactions can be complex and often involve sensitive information, so it's important to work with an advisor who you can trust to act in your best interests.
Global reach: If your company operates globally, it's important to choose an advisor with a global network of contacts and experience working on cross-border deals. They should be able to navigate the complexities of international M&A transactions and help you achieve a successful exit.