Strategic Planning for a Successful M&A Transaction

In M&A, planning is required to ensure developing the most successful, valuable business possible. Although it is common for small- to medium-sized firms to overlook this function—especially those in PR and other creative services—I encourage you to avoid falling into this trap.

Strategic planning involves conceptual, long-term, broad-based thinking. It is an attempt to define the vision of the business and determine what it should do and what steps it should take to become a desirable M&A candidate. A strategic plan usually goes out a minimum of three years and, more often, five or ten years. It deals with concepts and ideas expressed in words instead of numbers.

A long-term budget should be included in a strategic plan. Net revenues should be projected, with labor and operating expenses projected as well.

Consider moving into new markets. Strive for high productivity/utilization. Continue updating billing rates. Consider moving into value billing for certain clients/projects. Continue making your firm unique.

Get your second tier of management in place. Strengthen your organization chart. Modernize your reporting system so you can accurately determine profitability per client and project. You must be able to measure this. You must analyze your markets and market share. Why does your competition win pitches against you? Do they have a better firm, more depth, and more experienced staff? Try to get answers to these questions. Doing so could prove invaluable by giving you strategic direction for a successful transaction.

Your firm’s market position will influence your strategy. Who are the competitive firms controlling the clients that should belong to you? Find out as much as possible about your main competition. What makes those firms different than yours? Is it leadership? A second tier of management? Their business niches?

Planning for a transaction should take place several years prior to seriously exploring the sale of your firm in order to have a seamless integration of firms and to maximize its valuation.

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