Perhaps the most important step in the M&A process is the first step ‒ providing potential buyers with a clear, concise Executive Summary document that highlights your company's value and why acquiring your company is a definite need.
An Executive Summary is used to get a buyer's attention and differentiate your company from other possible M&A targets. Usually, it is the first thing a buyer sees about your company and will often determine if they should take further action. In short, an effective Executive Summary can be the springboard to a successful M&A deal.
So what makes for an effective Executive Summary?
We sat down with a number of Corum team members to get their insights about Executive Summaries. Corum’s team has years of experience as founders and CEOs who have successfully sold their own companies, and as dealmakers who have assisted Corum clients in selling their companies. They have a wealth of knowledge about what makes for an effective Executive Summary. Here's what we learned.
Keep it Brief
A good Executive Summary needs to be short ‒ in the range of four- to -eight pages. Corum Executive Vice President Rob Schram puts it this way, "Less is definitely more.” He says, “The potential buyer only needs enough compelling information to realize that the company is a must-have.” Corum Senior Research Analyst Debi Davis adds, "An Executive Summary is a tool to entice a potential buyer to learn more about a company. It is not a company history or technology whitepaper — it needs to be concise so time-crunched buyers will read it. Schram advises sellers not to waste the buyer's time with a lengthy document. "You only get a few minutes of their attention, so use it wisely.”
Open with a clear value statement
The start of an Executive Summary should be like that of a news article – the first paragraph frames the key elements of the story in an attention-grabbing way. In an Executive Summary, the attention grabber is what makes your company special ‒ the value your company represents to the buyer. And that value should be stated clearly in the first paragraph. Serge Jonnaert, a Corum Senior Vice President, says a clear value statement is the most important part of a seller’s message. He notes, “In those first few sentences, the buyer should know exactly what the company does and what makes it special.” He goes on to say, “Tell the whole story in one paragraph and find a way to showcase your company's greatest strength right up front. The person reading your executive summary will decide within those first few lines if they will read it until the end.” That first paragraph needs to make an immediate impact, so Jonnaert advises sellers to be assertive in their value statement. “Use big numbers, important names, make bold claims and don't forget to show passion. That's the energy that brings to life your executive summary and helps it stand out even while remaining serious and businesslike.”
Tell the whole story in one page
If you catch a buyer’s attention with a captivating first paragraph, you can sustain their interest by telling your whole story in one page. According to Corum Executive Vice President – Director Dave Levine, that first page should present the important, memorable differences separating your company from the hundreds of others that the corporate development officer has looked at recently. Levine recommends that everything that a decision maker needs should be on that first page: market opportunity, growth, potential competition, patents, partnerships, and data. Make sure to highlight your company's special assets, such as domain expertise, intellectual property, sales pipeline, or unique positioning in the market. Keep in mind, the objective of the first page is to get the buyer excited about the opportunity your company presents. But Levine cautions, "Keep the specifics light as you don't have room to go into detail."
Align with success
Getting a buyer to think of your company as a success sets a positive tone for a deal. A good way to set that tone is to highlight your success with customers. If your customers include some of the biggest Fortune 500 companies, make it known. A strong customer list validates your product, service, and your company's reputation. As important as it is, highlighting customer success is often overlooked by sellers in their Executive Summary, something Ian Thurbon, a Corum regional advisor, acknowledges. "We see clients missing this one all the time." Thurbon sees an impressive customer set as a reflection of a selling company’s standing. "If a multi-billion dollar company trusts you with their business, it says something and then leaves an impression with the potential buyers." But he says success doesn't only mean an impressive customer list. Other successful associations, such as partnerships, technical distributors, and resellers, ought to be highlighted too. This is especially important for new companies that have not built a customer base. Thurbon points out that geographical reach ‒ either regional, national, or international ‒ should also be underscored. Even press coverage and awards garnered by your company can be important in establishing achievement. The thing to remember is anything you can do to demonstrate your company’s success adds to your value in the eyes of a potential buyer.
Map to disruptive trends and best practices
Buyers looking to acquire technology companies often focus on those that are innovative in areas that are transformative and present new market opportunities. Technology leaders, companies that are well-position in the next big wave of technologies that can change lives, present extremely attractive targets for buyers. These buyers are looking for solutions that map to the disruptive trends which shape their future. According to Corum Executive Vice President – Director Dan Bernstein, that positioning presents an opportunity for sellers who time it right. He points out, "By aligning yourself with the biggest tech trends on the market, you align yourself with opportunity. That's what buyers are looking for ‒ vision, future growth. You can't catch up to a wave. You can only get in front of it. Show them why your company is perfectly aligned to capture the moment before it passes.”
Emphasize current value and future potential
An effective Executive Summary should be a strong statement of your company's value to a prospective buyer. You can make that a compelling statement and grab the attention of a buyer, by focusing on the now and the positives of what's on the horizon. Don’t weaken that message with a chronicle of your history ‒ even if your company has a successful history. Steve Jones, a Corum industry advisor, sees it like this, "We understand that your company has a rich history that's worth talking about. That legacy is something to be proud of. However, the executive summary is there to speak to its present value and greater potential that lies ahead, rather than trace the origins of your company or its products. The founding of your company, its various pivots and past successes are unlikely to be centrally important to the topic at hand."
Jones cautions that being too focused on the future can be problematic. He says, "The executive summary is not a venture capital pitch either, focused entirely on future potential. The future of the company is of vital importance, but it must be rooted in currently visible factors and traction, growth, customers, current trends, et cetera."
A little company history in an Executive Summary is reasonable, provided it is short ‒ no longer than a paragraph ‒ and adds a unique or unusual insight into the company. But Jones advises, "Save your war stories for entertainment next time you're at dinner with a potential buyer."
Focus on the opportunity to buyers
A buyer is interested in the basic opportunity your company represents. So highlight that opportunity by briefly and persuasively stating what your company does and its value, rather than presenting your technology. Often sellers make the mistake of using the Executive Summary to do a deep dive on technology. Corum Senior Vice President Martin Lowrie says, “We see this slip up all the time where a client will dive into their tech stack, their database provider, their coding language, and worst of all, they do it right off the bat. Dead wrong. The CEOs reading your executive summary are less concerned with the details and much more concerned with what the product does and the impact and potential on their future results.”
If you do mention technology, ensure that it helps convey your company’s value. And be brief. For example, the Executive Summary might say that your architecture is software agnostic. This highlights the opportunity for future business rather than the code itself. Lowrie tells sellers that there will be a time during the M&A process to get into the details of their technology. He assures them, “Don't worry, there'll be plenty of time to get into the hard work and magic you've put into your product, but that comes later.”
Sell the company, not the product
The value proposition for a buyer is the market opportunity your company presents. The Executive Summary should stress what your company can do for the buyer. A buyer wants to know what makes your company special. Does the company have a substantial market share? High growth rates? An amazing sales pipeline? A team full of industry experts that will be staying on after the sale? A patent portfolio? Low churn? The Executive Summary is not the place to dwell on the details of your company’s products or processes.
Corum Vice President Arnuad Viviers says sellers are so used to selling to customers that they have a difficult time saying what a buyer initially needs to hear. According to Arnaud, "CEOs know their product, service engineering, and internal process down to a T. They're used to selling their product or service to customers, but the executive summary is not about selling your product, period. Avoid writing your value proposition as your customers would hear it."
Instead, Arnaud advises, "Anchor your position in features unique to your company ‒ the specific combination of market position, financials, quality of customers, team, or IP that your firm alone provides. Talk about the people, the organization, and the ideas that will move a buyer's business to the next level." In short, sell your company.
Catch the reader’s eye
Big numbers and impressive names are excellent ways to draw a buyer’s attention. So highlight them in your Executive Summary. Lonnie Shilling, a technology investment banker at Atlas Technology Group and former Corum Vice President, recognizes the importance of catching the buyer’s eye in this way. He advises sellers, “Use big numbers and important customer names as an opportunity to highlight some of your performance. Any impressive number or name you can cite is useful.” Some examples of performance numbers that can impress a buyer include a solid growth forecast, double-digit market growth, a large and growing number of clients, effective distribution channels, and doing business in multiple geographies. And as previously mentioned, if your customers include some of the biggest Fortune 500 companies, make it known. Shilling encourages sellers to be direct with this information. He says, “Are you capturing a multi-billion dollar market? Are you a global player? What puts you in that position? Present your biggest strengths high and clear and be bold.”
State why you are going to market
Two prominent questions a buyer has are why should I acquire your company and why are you going to market? Everything presented so far about Executive Summaries addresses the first question. Make sure your Executive Summary also answers the second question.
Corum President Rob Griggs advises sellers to tell a clear, positive story about why they are going to market. He says, "You want the future to look bright for your company and eventually your buyer. What aspects do you do very well and where do you need help? You might have an excellent product or service, you've done the hard work with engineering and maybe you need the marketing and sales force power of an acquisition partner to take it to the next level."
Above all, Griggs tells sellers to always look to the positive. According to Griggs, the question that needs to be answered is how will this deal be a big gain for everyone involved? He says this point is missed all the time. He advises sellers, "State this right up front. It is certainly a question that every potential buyer will want answered."
Get the help of experienced professionals
Corum founder and CEO Bruce Milne considers writing an Executive Summary the toughest thing to do in tech M&A. Getting it right requires the help of professionals who have years of experience developing Executive Summaries for technology company sellers. Working with you, Corum's staff professionals add their insight, knowledge, and experience to develop an Executive Summary that presents your message to buyers in an effective and compelling way.