The notion of the corporate M&A dealmaker, ‘tooled up’ as if for battle, is a prevalent image in the media.
As an oft repeated plot line in blockbuster movies, the portrayal of the evil, asset stripping dealmaker persists, pervasive in peoples’ minds.
Using sharp moves and underhand manoeuvres, said dealmaker will try anything to acquire the target company.
“Asset Stripper” - The very sound of the phrase sounds almost depraved.
At Boss Equity, we have witnessed many different approaches to merger and acquisition deal making and, from time to time, this has included what we call the “John Wayne” approach: shoot first and ask questions later.
Every meeting is a battle and every executive on the other side of the table is the enemy, to be beaten down with aggressive tactics that ensure the John Wayne character is victorious.
The Art of Finessing the Deal
Despite the existence of the John Wayne-type personas, there are also many shrewd executives, who understand that the real art of making a smart acquisition can be likened more to a dance than a battle - more a bolero than a paso doble.
The first step in the M&A process, is to ensure that the two sides are a good fit. Both business personality and culture are fundamentally important to the deal. Mismatches must be qualified out at an early stage.
Qualify early and qualify hard.
There’s absolutely no point in wasting your valuable time ‘dancing’ with the wrong partner.
Outsized Egos and Perverse Personalities
Over several decades helping our clients with M&A deals, it is surprising how often it is not the strategic fit that is the problem, rather, an issue regarding a clash of personalities or egos. This issue can be resolved if the process is properly managed.
At every step of the process, it’s imperative that expectations of all parties are set correctly. And during the initial stages, when the buyer and seller first meet, it’s also critical each meeting is meticulously choreographed and managed with care.
We find agreeing some guidelines and ground rules generally helps make meetings more productive and positive.
The first two meetings are akin to a courtship and comprehensive meeting management is critical. Our role, at this stage, is to ensure that both parties have the correct expectations and meet their pre-meeting objectives.
Just like two new partners in a dance, these first few steps are understandably tentative as both parties become acquainted and get a “feel” for each other.
Now is not the time for any John Wayne bravado. If these early steps are managed correctly and time is taken to ensure that both parties get to know each other, a strong foundation is laid down for faster progress later in the procedure.
How Good is the Fit?
If the buyer has a clear M&A strategy, then recognising and analysing the fit is a far easier and faster step. Your “M&A Strategy” plan is so important – It is the blueprint that drives the business forward.
The fit needs to be recognised clearly and quickly on both sides. If it’s not right, qualify early and get out, to avoid wasting everybody’s time. Otherwise, have confidence in your analysis and move forward, continually assessing.
Once engaged in the “dance”, having a well thought out and clearly defined M&A Strategy, with input from all your decision makers, will ensure that you move with greater ease through the M&A process. Much of your thinking will have been done in advance, which will free you to focus your attention on your next steps and the important personal inter-play that happens in any M&A transaction.
Resilience and Determination
Any new relationship will throw up challenges, particularly in the early days.
In most of the acquisitions we, at Boss Equity, have seen over the decades, there always comes a point where one or both parties say, “I don’t think this deal is going to happen.”
At one point or another during the process, one party or the other has serious doubts that the deal will close.
By its very nature, M&A is challenging, convoluted and frustrating. It is a process that involves many twists and turns. Both parties need deep reserves of resilience and determination to see it through to fruition.
Just like two dancers, practising their movements, not every step will be easy, and some steps may need to be repeated.
Maintain Good Form
With time and hard work, the two partners in the M&A dance will come closer and closer together and gradually begin to fall into step. Just like two dancers.
However, don’t become too relaxed and lose form just because things are progressing well; you need to keep focused and realise that the deal is not over until the music stops and you’ve taken your final curtain call - The agreements have been signed and the transaction is finalised.
Dance Teachers Available
Most important of all, whilst you go through the M&A steps, it’s critical you maintain your focus on your business.
Fifty per cent of organisations that reach due diligence still fail to complete. This is costly, time consuming and distracting for your business.
Don’t become another statistic; let us guide you to the “right” partner and through the “right” steps.
Boss Equity’s “Dance Teachers” know the software sector intimately. Our senior executives have all owned, managed and sold their own software businesses on an international stage.
For any Software Tech executives considering taking up the dance – either as a buyer or seller - then Boss Equity has experienced executives who can assist you throughout every step of the process, to ensure you find the “right” partner and you don’t become another failed M&A statistic.