Building an M&A dream team – What you need to know

As the old saying goes, there’s no I in team. But there is an M&A! 

One of the most crucial factors determining the success (or otherwise) of a business sale or acquisition is selecting the right team. Transactions are hard work and typically involve a set of skills that are unfamiliar to a business owner. Taking the time to assemble the right team and working well together through the process will go a long way to ensuring M&A success. 

Internal resources 

The first step is deciding which jobs are handled by the internal team and where external advisors are needed. This depends on a range of factors, including whether you’re selling or buying, the experience of the individuals involved, your capacity, and how close the target’s operations are to your own. The key is to get the right mix of internal expertise and “buy-in” but not to distract the team from their day jobs. The last thing you want during an M&A process is for the core business to suffer because people are stretched too thin.

Internally, the key people to involve in a transaction depends on whether you’re selling or buying: 

• In either case, the CEO, Board and Senior Leadership team play a central role. Their job is to make sure the transaction aligns with personal objectives of the shareholders, and strategic objectives of the business. This alignment must be revisited regularly throughout the process, to avoid “falling in love” or feeling obliged to complete just because you’ve invested a lot of time and money. If the transaction doesn’t align with your objectives, don’t do it. 
• Your CFO and Finance team will help with modelling, Due Diligence, valuation and financing issues. 
• You may need to engage other parts of the business depending on the process being run. However, transactions create both distraction and uncertainty for individuals who may feel like they’ve got little control over the outcome, so this needs to be managed carefully. 

External advisors  

External advisors bring expertise to complement the management team and reduce their workload. This typically includes: 

• A corporate / lead advisor is like your project manager. They take primary responsibility for the transaction process, applying experience from countless other transactions they’ve been involved with. Their job is to coordinate all internal and external parties, identify and overcome potential deal-killers well ahead of time, and overall, bring the transaction to a timely conclusion. 
• Legal advisors document the transaction terms in formal documents, craft appropriate structuring, and help manage risk. These documents are highly specialised and require an experienced corporate lawyer – not just your family lawyer who helps with your daily needs. This will ensure you not only optimise pricing, but also minimise risks associated with the transaction. 
• Financial and tax advisors help with Due Diligence, and make sure the transaction is structured in a way that reduces the tax impact for both buyers and sellers. 
• Depending on the nature of the business, you might also need expert input from IT, ESG and HR advisors. 
• You need advisors who are pragmatic and solutions oriented, not someone who works from a checklist and provides great technical suggestions with no real–world application 
• Expertise is important, but trust is paramount. You need to be confident that your advisors have “got your back” at all times, regardless of whether it means missing out on a success fee. 

Keeping the deal on course  

Once you’ve assembled your team, your corporate advisor will help set a clear plan for running the transaction process, including responsibilities and communication protocols. Some key points to consider include: 

• Using “gates” to manage how much time, effort and money you invest in the process. Generally speaking, your investment will increase over time as you build more certainty on the transaction proceeding. 
• You should have a clear understanding of what the transaction approval process is, both internally and with the counterparty. The last thing you want is to spend time on a process which gets vetoed by ”head office” at the last minute. 
• Constant communication is crucial. No-one likes uncertainty, there should be open and frank collaboration amongst your internal and external teams at all times. 
• Escalation points can be extremely useful but must be used sparingly. Leave the day-to-day discussions to your advisors and reserve the “captain’s call” only for crucial points in negotiations. 

Finally, when choosing both your internal and external teams, surround yourself with people who complement your personal style and are fun to work with. Whether you’re a buyer or seller, transaction processes are difficult, stressful, and often stretch over an extended period. Life is short so, work with people you like. This will also make for a more enjoyable completion dinner!!

At InterFinancial, we recognise the high stakes in every transaction. Our mission is to guide businesses through the complexities of M&A, ensuring not just completion of the deal, but that it delivers on its full potential. If you’re considering buying or selling your business, reach out to Mark Steinhardt for a confidential discussion. We’re here to support you with expert advice and a tailored approach every step of the way.