Common M&A Misconception: I already know my buyer

In today’s highly competitive market, it is easy to envision a future in which a large competitor comes knocking on your door, aggressively pursuing an acquisition of your company. As we’ve said before, however, this never leads to an optimal outcome. The buyer that you think would make a perfect fit is unlikely to show more than a passing interest; if they do want to get deeper in discussions, you need to make sure that you are still exploring all other possible partners. Fear motivates buyers to make competitive offers – fear that if they don’t make a move, someone else will. One buyer is no buyer, and you cannot assume that your idea of a “perfect fit” will pan out as planned.

 

It’s a new world of buyers, buyers from all over the world - many you’ve never heard of.  They may not even be in your technology space. They may not be in technology at all. Selling your company is a long process that requires many resources and hundreds, if not thousands, of hours dedicated to the sale. That’s why it is critical that you exhaust any and all exit avenues, whether that’s a familiar strategic buyer, a private equity firm, or a strategic buyer in an unrelated industry.

 

As we reported last month, financial buyers are now the most active. They don’t advertise who they want to buy, but that doesn’t mean they aren’t constantly looking for the next market disruptor. Buyers in Asia are relatively unknown in the West, yet they are closing some of today’s biggest deals.

 

The point is: Most of the time, you don’t know your buyer. Who is likely to know your potential buyer? An M&A advisor who has decades of experience closing deals around the world.

 

Posted by , Executive Vice President on 7 July 2017
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