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requires that the owner treat it as a fulltime job . Not doing so can tank a deal : One of Holcombe ’ s clients decided to take on due diligence without the help of his legal team and got so distracted by the demands that the company ’ s revenues dropped and the seller lost interest . In most sales that Lee has been involved in , sellers hire a broker , especially as the size of the selling company increases . Brokers often have a lot more insight about potential buyers than sellers do . Take a medical practice : “ They don ’ t know who is out there looking to roll up or acquire a bunch of physician offices ,” says Lee . “ They have no idea — they ’ re heads-down and taking care of patients .”
Several factors will affect the sale price , and Rocca advises sellers to determine who are likely to be their high-value buyers and to look at the sale as the buyer would . That means assessing with a critical eye which elements of the business will be most valuable to a buyer and which most concerning . Are future revenues highly dependent on the current owner ? If so and they plan to exit , the deal may be worth less to a buyer . The same is true for customer concentration : Most of the revenue depending on just a few clients could lower the price , Rocca says .
Company culture matters more than ever to deals . McKinsey & Company M & A partner Rebecca Kaetzler said in a company podcast in 2020 that the consulting firm ’ s data shows companies that get merged or acquired are more likely to hit their cost and revenue targets if they plan how the two cultures will work together . That means cultural diligence — frank discussions about how the two companies ’ management practices and ways of working differ and how those differences will be dealt with — is as important as due diligence . That process might involve bringing in an outside consultant .
HUB International has done about 800 mergers , and only a handful of those have failed , says Ryan McManus , vice president of mergers and acquisitions . The number one reason for post-deal
52 comstocksmag . com | June 2022