The first meeting between prospective buyers and sellers is second in importance only to the closing meeting. The first meeting is about chemistry, culture, and fit.
There are several crucial issues that need to be resolved early on.
1. 1 + 1 = 3. The fit of the two companies must create a strategic advantage in services, quality, responsiveness, and intellectual depth.
The parties need to understand that both firms should improve incrementally. Strategic and synergistic benefits are more important than financial. The financial benefits should be the result.
2. The buyer wants assurances that sellers will remain after their earn-out. They do not want to buy the firm and lose key executives once the earn-out is complete. If the seller does not have that intention, it should be disclosed early on so the buyer can strategize and manage the succession. There should be no ambiguity—only honesty and transparency.
3. The corporate M&A adviser, whether representing buyer or seller, should play an integral role in managing the process and facilitation; working with both buyers and sellers, reviewing and exchanging information, and working with CPA firms and attorneys. The M&A adviser should not be a “broker.” He/she should be part of the process, not an outsider making an introduction, with little involvement after the introduction is made.
The adviser’s role is to maintain momentum. This is critical because if the parties do not communicate for several weeks, distracted by client commitments, travel, and other agendas, the other party may lose interest or move on to other prospects. Buyers typically move very quickly due to time constraint and the exclusivity of the deal.
Excerpted & modified from “Doing It The Right Way,” 15 Crucial Steps For a Successful PR Agency Merger or Acquisition,” 3rd Edition