How to Pick 'the Pick of the Crop' in M&A Advisement
You wouldn’t engage a physician, an attorney or an accountant without satisfying yourself that his or her qualifications were first-rate. You should take no less care in your search for a professional to advise you in the sale of your business or in your purchase of another firm.
Not everyone who claims to be a capable M&A advisor proves to be one in practice. Unfortunately, misjudging an advisor’s credentials can prove to be a costly mistake. Our experience points to a number of criteria that a truly qualified advisor should be able to satisfy:
Industry reputation. Widely known, universally respected and frequently consulted: these are the hallmarks of professional stature in any business. M&A advisors who have repeat engagements with their customers, and who can readily provide references and endorsements, are the ones with the kind of reputation you want on your side.
Industry knowledge. A competent advisor will know M&A candidates of every size in every industry segment in all regions. There should be a database of prospects that the advisor can call upon to get the search quickly under way. (At New Direction Partners, we call the database we use our “Deal Log.”) Also look at the advisor’s connections with vendors and trade associations—important leads for your transaction could come from these sources.
Integrity and business ethics. Reputable advisors always avoid conflicts of interest by representing only the buyer or the seller in a given deal—never both. Protecting confidentiality is another unbreakable rule for M&A professionals.
Financial expertise. Making the dollars work in an acquisition can be a complex assignment. Does the advisor have the high level of financial skill needed to structure and consummate a profitable deal?
Negotiating talent. Tact and diplomacy are everything in the sensitive task of getting a buyer and a seller onto the same page. An advisor must be able to leave both parties feeling good about the deal they have closed.
Deal process. M&As can’t be jury-rigged or improvised. The advisor should be able to describe a proven process—a series of distinct and logical steps—that will lead to a timely sale.
Business development ability. Before you can sell your business, you may need to grow its revenue or broaden the portfolio of services it offers. Can the advisor be your reliable guide in the expansion, working closely with you during whatever period of time it will take to make your company marketable? Hint: a true professional will never rush a transaction simply for the sake of getting it done.
Access to private equity. It used to be nearly impossible for printing and packaging companies to attract private equity investors. Recently, however, these players have emerged as important sources of funding for print industry M&As. As a result, knowing who they are and what kinds of investment opportunities they are looking for has become another key qualification for advisors.
Any M&A advisor worth his or her salt will be prepared to give you satisfactory answers on all of these points. At New Direction Partners, it’s a conversation that we always relish having with our clients.
Frank D. Steenburgh, partner at New Direction Partners, brings over 45 years of industry experience, including the past 30 years in digital and is internationally recognized as an expert in digital printing and publishing. His experience includes corporate officer at Xerox and president of Indigo’s Americas operations. Frank’s value includes a wealth of global industry contacts, a proven track record in development and implementation of business strategies that drive revenue/profit growth and a deep understanding of horizontal and vertical markets. Contact him at (610) 230-0635, ext. 709.