Current M&A trends include the importance of preparation, transparency, and understanding the emotional aspects of selling a business.
The BizTimes M&A Forum brought together Milwaukee area industry leaders to share their insights and experiences on mergers and acquisitions. The event was filled with valuable information, and several key takeaways emerged.
The first panel discussion provided insight from leaders at Generac, a Milwaukee-based generator manufacturer, who discussed their approach to dealmaking. The second panel provided insight from buyers and a seller who shared their experiences navigating past transactions.
Generac's Approach to M&A
Thorough preparation and integration
The company leans on external advisors when needed, such as outside counsel for legal due diligence. Deals can come together in many different and creative ways, officials said.
External advisors can be critical in designing creative ways to problem solve to make deals happen. Sellers should understand all aspects of their business and be forthright in conversations about potential risks to help avoid surprises.
Deal fatigue
Selling a business is a full-time job, and deal fatigue is a real challenge. The company reviews hundreds of deals annually, with a high close rate once they reach the letter of intent (LOI) stage. Deal fatigue can be exhausting for both buyers and sellers, but staying focused on the end goal and relying on advisors can help.
International considerations in M&A
The company's international deals face challenges such as time zones, language barriers, and cultural differences. Understanding and addressing these factors are crucial for successful integration. The speakers emphasized the importance of being empathetic to employees and aligning with the company's strategy for smooth transitions.
Insights from the buy-side panel
Transparency and certainty of close
The panelists emphasized the importance of transparency and certainty of close in their approach to using their own capital for deals. Having a clear strategy and being transparent with risks can help build trust and provide successful transactions.
Emotional components of selling
One panelist shared his personal experience of taking five years to sell his business, highlighting the emotional components of deciding to sell. Factors like age, family, management team, and strategic partners were all considerations. The risks and time involved in executing an employee stock ownership plan (ESOP) were also discussed, with panelists advising to at least consider it, despite the complexities and time required.
Macro outlook on dealmaking activity
The panelists shared an optimistic outlook for deals picking up, particularly in the lower end of the middle market, which is somewhat immune to larger macro trends. The panelists also highlighted the attractiveness of sectors such as defense and aerospace manufacturers due to their complicated products and defendable margins.
Final thoughts on M&A trends
The forum provided a wealth of knowledge on the intricacies of M&A. Key themes included the importance of preparation, transparency, and understanding the emotional aspects of selling a business. Deal fatigue is a common challenge, but staying focused on the end goal and relying on advisors can help navigate the process. Whether on the buy side or sell side, having a clear strategy and being patient with the process are crucial for success.
How CLA can help with M&A
CLA can help guide you through the complexities of the process, from preparation to integration. Our experienced advisors are here to support you every step of the way. Contact us today to learn how we can help you achieve your M&A goals.
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