The process of conducting an M&A deal has altered substantially over the years. Yet the basic pillars of how deals are done — targeting, negotiating, due diligence and integrating — have remained constant throughout these changes.
Mergermarket and Vintage gathered five experts to discuss how the dealmaking process has changed. As well as this, they offer up the lessons they have learned, through decades of dealmaking experience, regarding what makes for successful M&A targeting, negotiation, due diligence and integration.
Q: From what you’ve seen, has acquisition targeting changed over the past five to ten years? In what way?
Brian Moriarty, former Vice President, Hewlett-Packard > Trends around target sizes ebb and flow, and can often hinge simply on how confident boards are. If they are optimistic, they will take bigger bets and flyers, and if they are more conservative they will do much fewer and much more solid M&A deals. Over the long term, the biggest change in targeting has to be the information available. The sheer amount of information you can get a hold of, read up on and digest before even contacting people is astounding.
Marshall McKissack, Managing Director, Head of M&A, Stephens Inc. > Technology plays a big role today providing buyers the capability to screen lots of companies in many different ways and quickly. Access to information is huge as well, as Brian said, and intermediaries are important in that process from a relationship standpoint by connecting the data with the decision makers.
Karim Motani, Corporate Development and Strategy Director, 1800flowers.com > For me, ten years ago you still had the ability to identify and acquire a proprietary target as far as private companies go. Now, every potential target can be found and there are a lot more intermediaries and the marketplace is much more transparent. It is a lot more difficult to do a deal under the radar, which is a big change.
Matthew Gemello, Partner, Baker & McKenzie > Targeting has taken on a greater significance. Technology and innovation has a unique life cycle compared with other industries, which puts a premium on successful targeting in the tech space. Creative foresight and vision are often required to see the business at the idea stage. The pace of dealmaking has demanded that everyone improves their skill levels because companies don’t have time to make mistakes or lollygag through a transaction, or spend six months thinking about who their targets are. Successful firms are the ones who do that quickly and efficiently. And the ones that can’t do it are the ones that are missing out on these deals.
Jeff Drazan, Managing Partner, Bertram Capital > For us, we know better today what makes for a great Bertram deal. Over time you develop experience with various value creation.