11 Jul Three Things That Will Make Your IT Services Firm Ready (and prepared) For a Merger and Acquisition
How do you know if you’re ready to either buy an IT Services company, or sell your own?
Ever wonder exactly what you need to make this happen, without all the hassle of trying to do it yourself?
● What criteria do you need to meet?
● What does your financial picture need to look like?
● How much due diligence needs to happen, before you can pull the trigger, and who does this part?
● And how do you know if you’re ready, culturally?
You’ve got questions and we have answers. We’ve developed a process to help guide you through growing your company through a merger, or by selling your firm, and hopefully sailing off into the sunset of another business adventure.
There are three pieces you need to make an M&A successful.
You need great M&A advisers, great tax advisers, and an equally good attorney.
On top of that, you need to have a plan for correctly implementing the merger assimilation of culture, people, values, and attitudes.
But first, let’s begin with defining the three must-haves of a successful M&A.
The worst possible scenario for you would be to engage a business broker, or investment banker, that simply gets the deal done and runs off into the sunset once the ink is dry.
Too many business executives work with bankers/brokers to help them manage their merger and acquisition, only to miss the mark when it comes to the most difficult part.
That difficult part is what happens after the M&A is done.
You absolutely need to have someone help you navigate all the post-merger activities. This is often times the most difficult part of M&A.
A great M&A adviser will help you with six critical tasks:
- A great M&A adviser will show you what to do, not just talk about it. They’ll actually show you what to do. They’ll show you this, and more, by sticking with you when after the negotiations, and the mundane meetings.
- A great M&A adviser will guide you as you lead your new company. They’ll walk you through how to lead your newly formed company, and they’ll guide you as you take your new company down the right path.
- A great M&A adviser will help you through the due diligence process. They should aspire to helping you build a healthy balance sheet and help you understand how much you can afford to buy, assuming you’re on the buy side of the M&A coin.
- A great M&A adviser will get you a solid valuation. Getting this is important, check out our free valuation calculator by clicking here.
- They’ll help you with affordability. A great M&A strategy firm will help you with the mundane things like understanding the golden rule of affordability, which says most IT Services firms can buy companies about one-half your size.
- A great M&A adviser will help you develop a financial road map. They’ll work with you to craft what an ideal prospect looks like, in order to acquire.
Great tax advisers
A great tax adviser is all about saving you dollars and sense.
Especially when structuring the M&A deal.
The wisdom and advice you get from a great tax adviser will help the overall finances be the most efficient. We’ve seen situations where tax advisers can make a pretty big dent in savings, up to 20%.
A great tax adviser is part of the bigger picture, the three legged stool of M&A, as we call it.
Attorneys that get the deal done
Lawyers in the M&A process should be about one thing: mitigating your risk.
Attorney’s that get your IT Services firm through an M&A deal should only be concerned with structuring the deal, legally.
We often see tech companies confuse the attorney’s role for that of an adviser. Don’t confuse your M&A adviser role with the role of your attorney. The attorney’s involved should be laser-focused on the legal structured part, nothing else.
Ideally, you want to engage an M&A firm that works with attorneys who have experience in your industry, otherwise you risk blowing up your deal.
In the end, make sure you’re not penny wise and pound foolish. Meaning, you’re not going to want to be extremely careful about the small amounts of money, while disregarding the larger sums. You need all three legs of the M&A stool to make an M&A deal work.
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