It appears that many buyers are currently on the prowl, attempting to bag bargain acquisitions by exploiting business owners blinded by multi-million Dollar cheques and disadvantaged by a lack of advice from a seasoned M&A professional.
We are finding that this behaviour is becoming increasingly common as both corporate and financial buyers seek to avoid the increasingly competitive atmosphere surrounding deals, which drives values higher.
One such example of an acquirer attempting to buy a strongly performing company for a reduced value by approaching the business owner directly can be highlighted by our recently completed deal involving document management company Archive Solutions. Prior to engaging Benchmark International, Archive Solutions’ shareholders were approached by the AIM quoted support services company, Restore PLC with an offer to acquire the company for $1.93. Following this approach, the Shareholder instructed Benchmark International to market the Company and drive the deal value higher.
Following a successful marketing process which drew significant interest both nationally and internationally from trade and financial acquirers, Restore PLC placed a revised offer of $5.25m, more than double the original offer.
This deal for Archive Solutions showcases the importance of instructing an experienced M&A specialists to lead the sale of a company. Set our below are the three primary reasons why M&A specialists enhance the overall value received upon exit for business owners.
Engaging an experienced M&A specialist is imperative to a successful deal completion. Experience feeds all aspects of the company sale process, beginning with the sales documentation drafting. Knowing what acquirers are looking for when viewing sales documentation and which potential acquirers to target is essential to ensuring the maximum impact of the marketing stage. If you effectively market the opportunity this sets up for a strong negotiation stage.
Again, the benefits of experience are evident come the negotiation stages. Bids can often prove deceptive and a bid which, on the face of things may seem like a great deal, it is possible that the deal can be structured in a manner which may not prove to be what was expected. For this reason, the ability to evaluate bids and present the realities is crucial to achieving the best outcomes. An M&A specialist will also have a strong negotiation skills as managing bids and acquisitive parties correctly allows for significantly improved deal values.
Fully understanding the importance of experience in continually successfully completing transactions which provide the owners of the business with maximized value upon exit, Benchmark International have gathered experienced M&A professionals from around the world, working in conjunction with one another to successfully market our clients companies to appropriate parties globally. Combining a wealth of knowledge and experience with an on the ground presence with a global network, we continually provide clients with a selection of differing, highly motivated potential acquirers.
An aspect of the company sale process which often remains unappreciated is the time and effort necessary to complete a successful exit. Business owners managing the sale themselves are faced with the vastly difficult task of also maintaining consistent operational performance within the business. This can be hugely difficult and often leads to reduced performance and, as a result, a reduction in the value of the company.
Instructing a specialist to lead the sale allows for focus to be maintained and continued performance levels as the M&A advisor handles the majority of time-consuming processes.
Marketing and research capabilities
Maximum value received upon exit cannot be guaranteed unless the opportunity has been placed in front of as many potential acquirers as possible. In order to effectively market an acquisition opportunity, due to the increasingly globalized M&A environment, the specialist instructed must possess the capabilities to communicate with every potential acquirer on a global scale.
In order to ensure all potential acquirers have been identified, the M&A adviser must also possess the ability to identify all potentially interested parties. This requires both a thorough understanding of research techniques and M&A knowledge in addition to specialized M&A research software.
Combining global research and marketing capabilities allows for increasing levels of competition surrounding deals, an essential aspect in ensuring maximum value is received. Increasing levels of competitiveness draws increased bids both in terms of number and value.
Understanding who would be motivated and capable making an acquisition is not enough. It is imperative that the M&A specialist possesses the capabilities to market the company in a targeted manner to highly motivated acquirers across the globe. Benchmark International have developed a unique M&A software platform called Deal Desk Pro which allows us to identify and engage closely with acquisitive parties on a global scale.