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Who Should You Include in the Deal Process?

November 4, 2022
Who Should You Include in the Deal Process?

Mergers and acquisitions, like other investment transactions, require significant planning before they even begin. During the planning stage, determining who will be involved in your deal process is crucial. The people you choose as a part of your deal team can make or break your experience. The importance of communicating effectively is often overlooked and not properly taught, but if done right, it helps enhance the value, sometimes beyond expectations. Most importantly, it helps keep the train on the tracks and allows you to cross the finish line on your timeline.

Definition of a Deal Team

As a business owner, you may not have all the knowledge needed to effectively and strategically sell or acquire another business. No matter if you are an expert in your own field, bringing in outside knowledge can act as a preventative measure against potential unexpected problems.

To be involved in a mergers and acquisitions deal team, a person should be extremely knowledgeable about a specific part of the transaction. Key stakeholders like consultants, investment bankers, and lawyers or other legal counsel are all examples of valuable professionals who could contribute to successfully closing a transaction. The more informed your team is about the deal, the better.

A deal is much stronger when a team is made up of several experts who handle individual aspects of the M&A. However, integrating the expertise of each member of the team must happen for the collaboration to be effective. Without it, a transaction will have too many moving parts — leaving much more room for error.

Role of Key Team Members

It is clear that having more people involved in the merger and acquisition process outside of the business owner is necessary. However, who else should be included? Here are several suggestions on roles that are beneficial.

– M&A Investment Banker. When it comes to quaterbacking a deal from start to finish, a M&A Investment Banker is a major asset. Their experience in preparing the company for sale, putting together the marketing materials, positioning the unique value drivers, generating interest from global buyers, analyzing deal structures and facilitating the due diligence process, all of which will bring the much-needed confidence to the deal. In addition, their knowledge of handling the “people” aspects of a transaction, such as negotiation or communication between the business owners, management team, and buyers, helps establish boundaries and balance throughout the process and helps ensure the transaction process is smooth. Plus, a nonjudgmental expert will objectively handle the general management of the transaction. A M&A investment banker is perhaps the most important person you can select as a part of your team.

– Accountant. All transactions need an accountant. The quality of the company’s financials and bookkeeping policies/procedures can significantly impact the deal value and outcome. Besides presenting true and accurate picture of the company’s financial health, a detailed financial projection is used by the buyers to understand the company’s cash flow generating capabilities. Because it will serve as the basis for their valuation analysis and also help determine the purchase price to some extent.

– Financial Advisor. Personal financials of the owner matter, especially in an M&A transaction. Properly understanding how much will your family need to maintain your lifestyle after the sale, calculating tax liabilities, where should the money be invested and educate you on other financial planning and asset protection strategies to help ensure there are no mistakes. Understanding these objectives can be tricky, but diligent preparation in the present can facilitate smoother transitions in the future.

– Legal Counsel. Obtaining legal counsel is a necessary and unavoidable step in the M&A process. Navigating local, state, and federal laws can be a challenge; a lawyer will take that responsibility off your shoulders. Their presence is also required for many legal documents that have to be created to close a deal. For more specific concerns, finding a lawyer that specializes in M&A transactions is always a good idea. Your lawyer will be involved in every facet of the transaction, so selecting one you work well with is essential.

Besides these, other team members may be included to the deal team based on specific deal issues such as real estate matters, tax complications, HR issues, and environmental situations. Overall, your deal team should help you close the transaction, not hinder you during the process. Because of this, remember to keep an open mind about searching for new professionals outside of your current network. If someone has the experience and knowledge you need, don’t be afraid to ask them to be a part of your team.

Additionally, remember that this process may take time to happen. Some transactions take more than a year to happen, so take adequate time to build your deal team. Rushing will only increase the risk that you select someone who is inappropriate for your needs.

Consider the Scope of the Deal

After selecting who will be involved in your mergers and acquisitions deal, the logistics of the deal should be well-known and understood. They should be easily explainable to anyone that contributes to the M&A process. This way, as you are onboarding new members of your team, there will be little room for confusion.

An investment banker or someone specializing in mergers and acquisitions can help you enforce this. When selecting one, look for red flags that could lead to an unsuccessful deal.

How Persient San Diego Can Help

Finding investment banking in San Diego can be a challenge. However, Persient is a leader in helping business owners figure out a strategy to exit a business on their terms, rather than conceding to an unfair deal. Both our personal and professional experience as investment bankers makes us the right choice for your mergers and acquisitions.

Our approach goes beyond merely finalizing logistics and closing a deal. We ensure you are confident and comfortable in your decision, eliminating the potential nerve-wracking buyer’s or seller’s remorse that can arise during the M&A process. Contact us today to schedule your business landscape assessment and learn how we can help you achieve your business goals through analyzing current market forces, getting the best value for your business, and offering ideal go-to-market strategies.

Investment banking services and securities offered through Independent Investment Bankers Corp., a registered broker-dealer, Member FINRA / SIPC. Persient LLC and Independent Investment Bankers Corp. are not affiliated entities. FINRA Broker Check.

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