Mergers and acquisitions represent the next chapter in your business career. They can be the making of global brands, but they can also lead to tremendous losses when executed poorly.
Approximately $2 trillion is spent annually on M&A deals worldwide, and comparatively few deals ever achieve their target value for one reason or another. With such a high failure rate, it makes sense to bring in an expert who can provide advice and support along the way.
Here’s why you should have a consultant if tackling an upcoming merger.
What is an M&A consultant?
M&A consultants are essential to carrying off a successful merger. With 70-90% of mergers and acquisitions failing, these professionals have only become more pivotal in the last few years.
Primarily, M&A consultants act in a business advisory role. This means their mandate is relatively broad because every M&A deal is unique. M&A consultants can, therefore, act alongside accompanying acquisitions, mergers, debt management, cooperations, carve-outs and spin-offs.
Moreover, many consultants may specialise in particular industries due to their unique professional experience.
What is the role of a consultant in merger and acquisitions?
The role of a consultant in mergers and acquisitions is often difficult to define because they act in such a broad fashion; but, they can be positioned alongside any step within the M&A process.
Here’s a breakdown of the most in-demand services offered by M&A consultants:
Target Identification – Consultants can apply diagnostics to potential targets. They work alongside businesses to prioritise various targets to help you find the perfect company for your deal.
Strategic Planning – Every M&A deal is designed to achieve specific goals. Working with a consultant can enable you to determine your strategy and outline the objectives of your next M&A transaction.
Communication – Finding the best way to communicate the benefits and overall value of an M&A deal is challenging. However, a consultant can crystallise the benefits and support you in communicating them with all stakeholders.
Financing – Did you know that the average M&A deal value globally in 2022 was $68 million? As you can imagine, most companies must draw upon financing to make their deals happen. Consultants can provide tailored support on an optimal financing structure for your organisation.
Business Valuation – Acquiring an accurate business valuation is critical, whatever the deal. M&A consultants can help you obtain independent valuations for your company and your target company.
Due Diligence – Consultants can also perform additional due diligence in the operational, commercial and financial fields to help you assess the risks of a particular deal.
Note that these are only the most common functions of M&A consultants. These professionals can support you in practically every task during the various stages of an M&A transaction and post-deal integration planning.
What are the benefits of having a consultant during an M&A?
Managing your M&A deal has a range of benefits for your deal. Ultimately, the most important benefit is they will increase your chances of achieving your deal value.
The final decision on any matter rests with you and whether you take their advice onboard; but, if you are thinking about hiring a third-party M&A consultant, some of the benefits include:
· Unrivalled Expertise – Consultants bring extensive know-how to the table due to years of experience within the field. They already know your challenges, enabling you to plan accordingly while avoiding the most common pitfalls.
· Strategies for Success – Their experience allows them to craft tailored strategies to help you achieve your goals. In other words, they can empower you to follow the right opportunities.
· Risk Management – Performing your own due diligence can help, but there’s no better way to manage your risk than by engaging a consulting firm for a second opinion. They can lay the opportunities and risks on the table, giving you the data you require to make an informed decision.
· Get the Best Deal – A little-known benefit of M&A consultants is their ability to provide negotiation support. Although they don’t represent you, they can show you how to increase your bargaining power and advise you on whether you’re getting the best possible deal.
· Streamlined Integration – Post-deal integration is where countless deals die. M&A consultants can go through your business with a fine-toothed comb and support you in creating the optimal integration plan to avoid disruptions and maximise your deal value.
Working with an M&A consultant is the type of investment that repays itself many times over by helping to set the stage for the next chapter of your business.
What consultants do during M&A projects
The scope of a consultant’s role depends entirely on what you’ve hired them for. Some companies hire them from the beginning to identify targets, support due diligence and craft integration plans.
On the other hand, other companies hire them for a specific purpose when they lack the required in-house expertise.
The whole point of an M&A consultant is to perform any function that enables you to realise your expected deal value and achieve your objectives. Of course, not all consultants are right for you. Many focus on specific functions. This is why speaking to a consultant about what they can do before hiring them is vital.
How consultants help facilitate successful mergers & acquisitions
Consultants are a type of support personnel. They are not there to take control of your deal but to provide logistical support.
In essence, consultants are there in an advisory role. They aren’t there to replace lawyers, accountants or senior managers. Instead, they are a stabilising force with tremendous outside experience that can empower you to make the most profitable decisions.
At Hilton Smythe, our team of M&A consultants provide the necessary task and industry-specific experience to increase your chances of success. With decades of collective business experience, we have consultants who can provide tailored advice at any stage of your M&A transaction.To find out more about how Hilton Smythe can support your M&A deal, contact the team today.
