Avoid these Pitfalls When Choosing Your M&A Advisor

26 July 2017

The first half of 2017 has seen continued healthy levels of M&A activity in the software tech sector, with some major deals taking place. However, deals amongst SME's have also contributed a significant percentage of the sector’s total M&A transactions. For the smaller organisations seeking an exit - those without their own in-house M&A resource - it is imperative they choose the right M&A partner to guide them through the M&A red tape and potential hazards.

So, to the purpose of this short article – During our years spent facilitating M&A events for our clients in the software tech sector, we have encountered almost every conceivable obstacle and impediment to successful results. We have managed to overcome most of these through careful thought and consideration, followed by negotiation with the parties involved. Unfortunately, throughout our years in the M&A arena, we have also encountered some so-called "experts" - Investment Bankers, Boutique M&A firms and M&A Brokers - who have made us really ANGRY!!!

For over close to two decades, we have heard some real horror stories about some of these “M&A experts” - some we have witnessed first-hand, others have been reported to us by clients who have been taken through a highly unsatisfactory and unsuccessful M&A sales process.  Some of the horror stories involve large M&A organisations who boast many sales on their website due to the number of companies they engage with; yet, their true success rate is actually very different.

Some of the bad practises we have witnessed have truly astonished us. Occasionally, it is simply due to incompetence and/or a lack of understanding of this sector. However, of far greater concern, are the actions taken, which are quite simply plain, sharp practise.  Whatever the intention or cause, the result is the same: SME’s in this sector suffer an unfair disadvantage. Such advisors miss the true value and the opportunity to unlock the equity value SME business owners have built up in their business over years of hard work.

If your company is looking to acquire or to be acquired, BEWARE!!

We list below a few of the many unprofessional actions undertaken by so-called M&A experts:

  1. Taking on assignments and then leaving the client to do the majority of the work
  2. Winning the business by deliberately setting false expectations
  3. Setting exaggerated valuation expectations and/or overly optimistic timeframes
  4. Telling the client what (the broker thinks) they want to hear
  5. No understanding of the client’s business resulting in an inability to identify & articulate the value proposition 
  6. Shotgun approach to target buyers/sellers and not understanding the sector well enough for the sale process to remain confidential
  7. Approaching the M&A transaction from a purely accountant’s view and missing the true equity value in the business

If you are considering making an acquisition or are planning to sell your business, please talk to us early in the cycle. 

We cover North America, Europe and the Asia Pacific regions and focus specifically on the software technology sector.

We pride ourselves on greatly reducing the risk of failure of your M&A transaction and will always give honest feedback on your objectives; we don't simply say what we think you may want to hear.

If you would like a confidential, one-to-one call to discuss your M&A plans with one of our senior executives, please contact us

We promise we won't be shy in expressing our opinion : ))

 

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