HafeziCapital’s Merger & Acquisition Consultant team members act as an advocate for your organization and its buy/sell side needs. HafeziCapital looks at M&A from a process perspective undertaking numerous internal and external audits prior to an acquisition. Organizations can decrease the failure rate by 63% by implementing this proprietary process. Organizations become pro-active in understanding the transformative impacts that this process can have on their business
CEO’s fall for the numbers-trap, believing that acquisitions are driven primarily by financials and nothing else. They only understand post-acquisition that they have become a weaker organization. Not undertaking a thorough analysis of the buying/selling process leads them into a negative feedback loop of M&A failures. Cornered and on the defensive, they are forced to ask what value and benefit(s) were extracted from the purchase. HafeziCapital plays a critical role in defining, mapping and executing on a successful M&A process. (for an example click here)
Corporations spend more than $2 trillion U.S. Dollars annually buying new companies. Yet study after study finds that the failure rate of these acquisitions is somewhere between 70% to 90%. Why do so many M&A’s fail? The failures are generally based on the fact that executives incorrectly match potentially targeted candidates to the underlying strategic objectives of the acquisition, failing to distinguish between the acquisitions that will improve current operations and those that transform the company’s growth model. The failures appear in three key areas of the M&A process; namely; Pre-M&A (analysis-targeting), the M&A process (Negotiation – Due Diligence – Structuring), and post-acquisition (integration – migration – customer ownership).
Why do I need a Merger & Acquisition Consultant?
Investment Bankers (IB) are compensated on a success fee basis. The motivation of the Investment Banker is to get “a” deal done as quickly as possible. It is the nature of the performance-based model. The more deals they do a year, the more money the IB makes. At times the deals are not very conducive to the buyer or seller, however, the deals are pushed through. This is where the Merger & Acquisition Consultant can help the Client articulate and develop a robust M&A strategy. They identify what verticals to enter, type of companies to acquire, and impact(s) it can have on the organization. In some instances, the acquisition should not happen, yet based on time and face-saving measures the deal is pushed through.
A Merger & Acquisition Consultant can be an intermediary and third-party validator of the deal. This results in the CEO’s having cover and being validated by their actions when a deal is not consummated. Having a Mergers & Acquisition Consultant that represents your interests, allows an organization to make better decisions.
Merger & Acquisition Consultant Buy Side
When looking to growth via acquisition, a critical component of the decision-making process is “how do we effectively deploy Capital?” HafeziCapital’s Merger & Acquisition Consultant team undertakes a thorough analysis of the market and develops the strategic objectives for the Client. Based on this analysis and in consultation with the client we develop an offensive and defensive model for Corporate Acquisition. CEO’s have to answers some key questions to stakeholders including but not limited to:
- What service offerings, products, and clients will increase the valuation of my firm?
- What is a safe size company to acquire, given our limitations?
- How can those acquisitions have a multiplier effect on the valuation of the firm?
- How will we integrate post-acquisition, and what type of a timeline are we looking at to fully integrate post-acquisition?
- How should we deploy capital (debt or equity) in acquiring the company?
This in-depth analysis allows our Clients to better understand what gains they can have, and effects it will have on the balance sheet and what is hiding around the corner.
It is critical that organizations look beyond the financials in an effective purchase. Organizations purely taking a financial approach to acquisitions, fail to realize the transformative effects. Clients assume that customers will naturally migrate post-purchase. Client churn rates and integration become a drag on the financial performance of the organization. If the acquisition is not structured correctly and integration lacks process, financial devaluation will impact the post-acquisition price. Structuring the acquisition in a flexible manner can ensure that acquirers decrease the associated risk premium to market levels.
HafeziCapital’s Merger & Acquisition Consultant help Clients with the pre-M&A process, defining their competitive advantage versus competitors in the market. Our analysis reviews the existing customer pool, services, offerings and baselines it to other key competitions. We review the weaknesses of product or service offering and how the customer profile could change. Based on where the client wants to go we develop a bespoke road-map for acquisition. This allows Investment Banks to be focused on your specific needs and drives successful acquisitions in a shorter timeframe.
Merger & Acquisition Consultant Sell Side
Every organization needs to be ready for the sale. Organizations undergoing an in-depth cleaning process manage to have higher valuation results than organizations that have not. The key reason is that buyers always have a higher sense of perceived risk. They use any potential issue as a negotiating tacting against the seller. HafeziCapital’s Merger & Acquisition Consultant’s job is to identify these risks and minimize their effect on the sales process.
HafeziCapital’s packages and structures the company for a sale by addressing any irregular issues prior to the sale process. Cleaning the Balance Sheet, selling underperforming assets, refining the documentation, and addressing inconsistencies minimize the negative effects. The reality is that out of 100 companies in the United States, only about 20 are sellable. Out of those 20, only 5 actually sell. Cleaning the organization from any excessive perceived risks lead to a higher valuation and obtaining strong offers. CEO’s have to answers some key questions to stakeholders including but not limited to:
- What does a successful sale mean to me?
- What does my exit strategy look like? The timing of sale?
- Who is the buyer of my Company? Why? How much?
- What is the value of my Company?
- Should I undertake a valuation analysis prior to acquisition? Will it help the sale of the Company?
- How can I protect my organization while undertaking a sale of my business?
- What materials do I need to have ready for the sale of the company?
A buyer always presumes the highest level of risk when buying a company. They will always position any issue within the organization in a negative light to increase negotiation leverage. Our job is to review the risks that buyers may perceive in the acquisition process. We source the adequate documentation and develop the correct narrative to mitigate the buyer’s perceived risk.
Bringing us in 3 years prior to an exit, has a very meaningful effect on the valuation of the company. A key tactic become clean the financials, contracts, litigation matters, and organizational issues to market-risk levels (where possible). By addressing these issues in a strategic-manner, organizations can position themselves in the best light possible. In most cases such organization are more apt to sell and at a high valuation.
What value we bring to the table?
HafeziCapital’s Merger & Acquisition Consultant’s key job is to provide value to your organization in terms of guidance and process. We are not conflicted and purely represent your interest in the transaction and hence advocate and represent your needs. Our Merger & Acquisition Consultants are involved in projects ranging from $1m to over $250m worth of domestic and international transactions.