Documens Boss

Many companies we speak with view M&A events much like buying and selling stock; it’s all about timing! However, in both the stock market and M&A brokerage, both the data and the experts belie this completely.  In fact, over time, market timing has seen the poorest results in both disciplines.
 

After speaking with hundreds of companies over many years, there are a few common themes we continuously hear that play along with this misconception of “ideal” timing, including:

1. Our sales keep rising; this could be our best year ever; why would we look to sell now?
2. While 2010 is a good year, 2009 was not; it is too soon to try to sell the company.
3. We should be able to increase sales without taking investment; why should we enter the market now?
4. We would rather wait until the stock market is growing faster and there is more confidence in the economy.
 

All of the above statements - and many more - share a façade of logic and, on the surface, appear to make a great deal of sense.  However, selling a company is never an exact science. The fact is, the best time to sell, is when there is an interested, strategic buyer, with the means to acquire a company and utilize the acquired company’s assets to grow and increase their sales and earnings. It really is that simple!  And this can occur in good markets, bad markets - in fact, under all market conditions.
 

At any time, an enlightened company should ALWAYS be looking at all potential opportunities to sell the company as well as to buy companies. This open approach will keep a company far more attuned to market realities and always allow them to better understand a realistic, market-based valuation of their company. Armed with this knowledge, management teams will, in turn, be able to create far more effective strategies and tactics to keep their company growing and successful. In fact, history has shown that, by not being open to M&A approaches, companies will lose value over time.
 

Instead of market timing, our studies have shown that, over the last several decades, there were some key factors that drove M&A success and allowed companies to realize profitable returns.  These factors included:

• FINDING key strategic buyers that value the company’s assets and who have the team to utilize those key assets for profitable growth
• An OPEN and receptive atmosphere with companies who approach to discuss potential M&A opportunities

• UTILIZING an M&A company or broker who truly understands the company’s market, solutions and potential, as well as global strategic buyers.

• CREATING a solid business strategy that includes a brief M&A strategy and evaluation method for potential, unsolicited offers

• FOCUSING on your company’s performance rather than getting distracted by potential suitors or M&A opportunities.
 

Business leaders should be planning for M&A events and discussing them whenever the opportunity occurs. A clear M&A process and strategy should be in place, including key evaluation criteria. These criteria are critical, in order that both unsolicited offers and other opportunities can be effectively evaluated.
 

The bottom line is that a successful M&A event is the result of a well defined strategy and process. These are not random events that occur as a matter of luck or simply good timing. YOU have to plan for them, control the process and always be vigilant, if you are to maximize the valuation and opportunity for yourself and your company.