Business Advisory: Mastering M&A through strategic readiness and preparation

Starting early with preparation and readiness activities significantly improves M&A outcomes. Many organisations fall into the trap of taking a reactive approach to M&A (e.g., just filling a data room or deferring details until the due diligence phase). It is critical to take a proactive approach by committing resources to thorough preparatory work before launching any M&A activity. While certain efforts may result in sunk costs for your organisation, investment in preparation invariably yields valuable insights whether the transaction proceeds or not. While you could face timing constraints, there are steps an organisation can take to prepare to execute M&A efficiently and effectively.  

Here are four practical tips: 

1. Think like an investor: Prioritise upfront the identification of key value drivers. If you are looking to sell an asset or business take the time to understand the asset’s key value drivers and weaknesses. Take a bidder's perspective, and pull the data to pieces, so that during due diligence you can defend against weaknesses or validate value drivers. This exercise should be a key component of vendor due diligence and complement external advisor vendor due diligence reports. As an acquirer, understand the sources of value you expect to create and how you will extract this value. If you do not have the depth of data, then make a plausible hypothesis that will drive your key due diligence focus areas. 
   
   
2. Bring in the specialists early: A “bee in my bonnet” over the years has been how late vendors and bidders leave transition planning. This can lead to rushed decision-making without the necessary data or analysis – it often feels like a game of catchup. Value extraction occurs post-completion, however the teams with the expertise and accountability for delivering synergies tend not to be associated with pre-execution due diligence. Involvement of transition specialists’, pre-execution, will link the target-end state to due diligence and deal negotiation. Transition specialists should be central in designing and executing both bidder and vendor due diligence, given they understand the nuances of value extraction, value protection and inhibitors. 
   
   
3. Understand your organisation’s capability: Continuously review and assess your team’s capabilities and the broader organisational “M&A muscle” to ensure you have the appropriate capability to successfully execute your M&A strategy. Understand your capability requirements, identify deficiencies, and then source capability to close those gaps. This could be through bringing new capabilities into the Corporate Development team (i.e., transformation capability), focused new hires or training and development programs – M&A is a capability not an event! 
   
   
4. Review past performance: Allocate time for continuous improvement activities including spending time to dispassionately review past performance and outcomes – leave your ego at the door. Given the number of variables that are present when executing M&A mistakes will occur. There are two crucial elements to continuous improvement.
   
   
   • Own your mistakes: Acknowledge errors constructively, understand their cause and impact without shifting blame or dismissing them as beyond your control. Objectively assess the root cause, and plan to make necessary adjustments to prevent recurrence. Be open to evolving and refining processes and approaches. As organisational M&A maturity grows, so will your execution insight.
     
     
   • Continuous improvement: Regularly review all transactions, even successful ones, from the perspective of participants. Challenge yourself to identify opportunities for better outcomes. At times in my career, I have engaged independent consultants to conduct objective reviews of my organisation’s transactions. This external evaluation offered insights and recommendations for enhancing our execution effectiveness that we might not have identified internally.

By investing in thorough pre-deal preparation and engaging in objective post-deal performance reviews, organisations can enhance their M&A outcomes significantly. A proactive approach ensures that every step – from understanding your assets and capabilities to learning from past successes and failures – builds towards more strategic and effective M&A execution.  

HOW DLA PIPER BUSINESS ADVISORY CAN HELP YOUR ORGANIZATION WITH M&A

Business Advisory supports clients to address the inherently complex risk of M&A by uplifting capability and overcoming any capacity challenges. Our integrated team accompanies you through the deal lifecycle with a single point of accountability from the pre-deal strategy and preparation, deal execution all the way through to close and integration/separation. We also provide specialised advice in M&A ESG, ventures and joint ventures.

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