How to find the right M&A matchmaker
(Editor’s note: This article originally appeared on Bizjournals.com, whose parent company, American City Business Journals, is the largest publisher of metropolitan business newsweeklies in the United States, with 43 business publications across the country.)
When business owners decide they are ready to raise some cash, they often come to an investment bank, like my firm.
Perhaps they want to sell all or part of the company or use the business as collateral for a loan to help them update equipment or expand.
When we help these business owners, we become something of a matchmaker — because it’s not all about the money.
Deals of this type always go better when the buyer or lender and the business owner see eye-to-eye. And if the parties genuinely like each other, that’s about as good as it gets.
So, I think the term “matchmaker” is a pretty good description of what we in the mergers-and-acquisitions industry do. In fact, I’m often reminded of the song by that name from “Fiddler on the Roof.”
Life imitates theater
You probably know the song: “Matchmaker, matchmaker make me a match…”
It’s sung by the daughters of lead character Tevye. They are making fun of their father’s traditional, turn of the 20th century, Jewish ways, which include arranged marriages. Tevye wants his eldest daughter, Tzeitel, to marry a wealthy butcher in town. But she is in love with a poor tailor.
Now, we would never steer our clients to a poor tailor, but we would advise them strongly to select a buyer or lender whose thinking and values are close to their own.
Over the years, I have found these types of matches are best because it’s a long journey to an M&A transaction. It often takes nine months to a year to sell a company. Things happen. Sometimes it seems like deals die a dozen times before they finally get done.
So it really takes a good M&A matchmaker to get the parties to the altar.
Here are some criteria you might use to select the matchmaker that will help your firm find the best investor or lender:
- As in any industry, experience is important. There’s nothing simple about selling or acquiring businesses or raising capital for a company. It takes time to establish a network of contacts and to learn how to properly work with buyers and sellers to execute a deal and maximize values.
- You’ll want to know what kind of team is supporting your banker. Do they offer market research, marketing, public relations, financial analysis and pricing expertise? Is it a larger, well-established firm with other experienced bankers who can be a sounding board for ideas?
- You want someone you can trust and feel comfortable with. Look for someone who is open, honest and forthright and is a great listener. After all, it’s your company and your goals.
- You want a banker with tenacity. Major financial deals are not completed overnight. There will always be issues along the way. Some will be simple, some complex. You want an investment banker who understands you and what you want to accomplish, is focused on achieving your goals, and refuses to give up.
One of the tools successful M&A bankers use is an auction process. It’s the best way to attract the best offer for your company. (I guess we are a little like Tevye in that regard.)
Auctions generate competition for your company among acquirers. An investment bank with extensive contacts among potential buyers, both in the U.S. and abroad, can rapidly drive up interest in your firm.
Potential buyers are competing with other firms, and while it is comforting for them to know that others see the same value they see, they also feel the urgency to act quickly and to make an offer that is better than their ‘competitors’.
If you are contemplating an M&A transaction, keep that “Fiddler on the Roof” song in your head — and remember that an experienced M&A matchmaker can get you the best price for your company from a firm that is a great match for you and your business.
Photo Source: Helloquence on Unsplash
About the Author
David J. Mahmood
Founder and Chairman
Phone: (214) 217-7750