by Eugenio Micheletti (*) for staffingamericalatina

When a company or investor decides to acquire a company in a target market, it is desirable that an advisor in mergers and acquisitions accompanies them throughout the process, optimizing the generation of business opportunities (selecting the right companies), weighing the conditions of each target market (current and potential situation), valuing the companies, and avoiding delays and problems throughout the entire process until closure (including post-closure) to ensure that the defined timelines in the planning are met.

There are functions that require a level of expertise that companies are not internally equipped to efficiently fulfill, so it is not advisable to do without a consultant. In this article, we will identify the factors for which the support of an M&A advisor is key to the success of the process.

In any market, the most challenging aspect is to find alternatives that align with the buyer/investor’s inorganic growth strategy and meet the expectations and characteristics defined by them. Knowledge of the market and interesting players in each of them (companies, shareholders, and senior management, and fundamentally the person(s) deciding to sell) is crucial to guide negotiations towards alternatives that can best achieve the objectives set for the process. There is a temptation to rely on public information and specialized sites, but selecting the “ideal” and at the same time “possible” alternative, and also getting to know the decision-makers, is what really matters.

Another fundamental factor is the management of timing throughout the process, as it is possible for the parties to quickly agree on the transaction value, but the process may fail during due diligence or contract negotiation, given the involvement of different advisors who genuinely seek to safeguard the interests of their clients. The advisor’s “facilitator” function is crucial and will reveal the willingness (or not) to reach a “fair” negotiation.

Lastly, it is also necessary to consider cultural nuances when dealing with different markets, leaders of different nationalities, both in communication and negotiation, and throughout the entire process. Knowledge of the idiosyncrasy of each country and details in customs and language can make the difference between closing a deal or not.

In summary, despite the tendency to prioritize technical aspects such as valuation, determination of contingencies, required working capital, accounting adjustments, purchase and sale agreement, etc., the hidden value is what makes the difference. There are not many advisors who effectively master these aspects.

(*) Eugenio Micheletti is the Director of Emerging Staffing Brokers – emicheletti@emergingsb.com

Foto de Scott Graham en Unsplash