This past year has been an unprecedented year for the mergers and acquisitions (M&A) space, hitting $5 trillion in volume in 2021 through over 40,000 transactions. The number of transactions in the distribution and manufacturing space has caused owners to take a closer look at their options regarding selling and/or acquisition options. Since the market has been hot, it is now a great time to think about your company’s future and develop a plan for the next two to five years. However, almost 50% of M&A deals fail to deliver on their promised value. During this piece, we will discuss the possible challenges and shortcomings that buyers face, and what they should keep in mind throughout the process.
One of the first steps for an acquiring mind is to create a watch list for acquisition targets, similar to a stock watch list. Most of the time, companies fail to have a proactive acquisition strategy. While CEOs, upper management and bankers can be fixated on negotiating the price, it is of utmost importance to diligently staff an acquisition team (legal, valuation experts, banker, etc.)