These are customary in bulge bracket deals. And the middle markets are growing more sophisticated to become similar to larger markets. However, not every tool used in larger markets warrants transplanting. Benchmark International clients rarely offer management presentations and we have no plan to change that practice. Here are reasons why we take that view, and why you should welcome the decision as a buyer.
- Management teams at bulge bracket companies have seen management presentations. They know what to expect and what is expected of them. Yet, this is rarely the case in the middle markets. As a result, presentations on these smaller deals require significantly more preparation time, tend to be derailed, and rarely make it to the end of the anticipated content.
- There is simply not enough to talk about. Middle-market businesses often have single lines of business and single locations. They tend to lack vertical integration, complex supply lines, and paths to market. They do not typically use complex financial engineering that must be understood by buyers. And they simply do not have a slew of issues that require a structured introduction.
- Many middle-market businesses are owner-operated businesses and their owners are driven by intuition, not data. For that reason, they do not collect much data and, accordingly, there is very little for management to analyze and summarize in a presentation.
- The management teams are smaller so the number of team members brought “into the know” when a management presentation is given is typically very limited—sometimes even limited to one person, the owner.
- These management teams do not have the bandwidth to set aside the time required to develop a quality presentation. Many of these businesses are selling precisely because the owners have not invested in overhead. Spending a few days to prepare for management presentations means key employees are taking their eye off the ball and no one is backfilling.
- Deals are done in the middle markets for a far wider variety of reasons than you see in larger markets. Because buyers are coming from so many different angles (and they themselves have a more diverse range of M&A sophistication), developing a standard presentation poses unique difficulties and results in the audience sitting through a higher percentage of unproductive dialogue.
Understanding these realities, as well as your interest in learning as much about our clients as possible and doing so in the most efficient manner, Benchmark International takes the following steps to compensate for the absence of management presentations.
- We frontload much of the material that would be in the presentation into the Confidential Information Memorandum (CIM). We believe our CIMs are far more detailed than what you typically see for businesses of similar size and this is a big reason why.
- We set up online data rooms early in the process. We strive to get as much raw data into your hands as possible through this approach. This is not a feasible approach for larger businesses that have too much data for you to sort through (a reason why they summarize their voluminous data in management presentations). But given how manageable the amount of data is for most middle-market companies, it makes sense for you to get to the unvarnished raw data sooner rather than later.
- We encourage early and frequent informal conversations with our seller clients. In cases where the CIM and the raw data do not cover everything, these less structured conversations allow you to get straight to the point and fill in the remaining gaps.
With all this in mind, we hope you will agree that our approach is actually the most efficient for you. If not, we invite you to comment below and we will reconsider our position as we are constantly attempting to give buyers the best possible experience.READ MORE >>