The M&A process deals with marketing the company to its prospective buyers based on its value. This is why it is important to prepare for M&A in advance to achieve positive results.
A large number of SME owners are likely to exit the business anytime in future after they realise that the expected value of their organisation is related to the process of preparing for that instance. The M&A process is all about marketing a company to its potential buyers. This incorporates both financial benefits and those related to that specific sector.
Although some entrepreneurs plan business strategies in advance, some potential buyers can approach a company anytime and if the owners are prepared, it can have an adverse effect on the price of the business.
Be prepared in advance. Get the due diligence done and make sure that your business is prepared to go through the transaction. If not, your company would have to assemble and prepare a large amount of data in less time. If the elements of the data are mismatched, this will weaken the confidence of buyers and have an impact on the price.
Help of a professional Chief Financial Officer who holds experience in M&A transactions can be beneficial for a business to achieve optimum price. Such professionals act as point of contact for the buyers and answer all of their potential questions, managing everything diligently. Besides, they handle contract negotiations and closure processes.
Price drivers – a forecast
Business forecast is the key element driving its price. The forecast information should include the advantages of synergy: sales synergies facilitating cross-sales so that the new buyers can sell their products to existing customers of the company and vice versa. Product development synergies are also crucial since when two technologies fuse with each other, they can create products with great market potential.
A CFO, who is commercially aware of the process, can identify maximum possible synergies and explain how the buyers can benefit from them. He can also create a credible forecast for individuals in diverse areas of the buyer’s business. A Chief Financial Officer experienced in mergers and acquisitions can also advise the company on what support they actually need prior to entering the M&A process.
Business as usual
It is essential to continue with business as usual at the time of M&A transaction. If the company is not able to meet sales target during that period, it is seen as a risk by the buyers. Given that forecast drives the value of the company, failure to meet the targets will have an adverse effect on valuation.
At Proactive CFOS, we have built a network which includes both offshore and onshore parties to help you find target companies for business mergers Sydney. We assist you with negotiation process and funding the transaction.