Corporate mergers and acquisitions (“M&A”) represent a common and key strategic growth alternative for business owners in today’s business environment. However, opportunities to acquire targets have become more and more difficult to come by and win, especially in a competitive climate with a growing number of strategic and financial buyers seeking to deploy available capital, and with investors applying added pressures on companies to accelerate growth.
A company that is seeking to grow through acquisitions (i.e., a prospective acquirer) is often disadvantaged in uncovering and accessing acquisition opportunities compared to buyers that are visible to sellers and have established connections to sellers directly or through intermediaries. Complicating the situation further, when a company gains access to attractive targets that are actively being sold, typically in a competitive auction process, a prospective acquirer is often disadvantaged in successfully bidding for the target due to limited insight into the business landscape, as well as into situational, legal, and financial factors that provide a buyer with leverage.
As a result, a prospective acquirer may not be able to move quickly enough in a transaction process compared to other bidders to successfully compete in an auction. Risks also exist for an acquirer to overpay for a target or to lose the opportunity altogether due to under-bidding or negotiation factors.
Because of these factors, engaging a qualified investment banker as a professional intermediary is usually the most proactive means for a prospective acquirer to successfully drive the acquisition of a target company. In these situations, an acquirer may exclusively engage the investment banker to execute a comprehensive “buy side” process for identifying, accessing, and facilitating the successful closing of one or more M&A transactions. The investment banker will also act as a critical bridge to connecting with M&A opportunities while the management team can continue to focus on operations.
In other situations, an acquirer may choose to run its own buy side process without the assistance of an outside advisor. Regardless of whether or not an investment banker is engaged, it is important for an acquirer to thoroughly understand the process of buying a company, collectively referred to as “the buy side process.”
To assist prospective acquirers in obtaining such understanding, Stout has published, “The M&A Buy Side Process: An Overview for Acquiring Companies,” which is available for free download at the link below.