Posted on: September 11th, 2019
Deals are complicated projects, consisting of various components with each playing a critical role in advancing the ball down the field. Acquiring companies usually bring on a team of outside advisors to navigate the process and provide process expertise. This includes accountants, financing advisors and lawyers. The ability of the advisors to team up and perform cohesively provides a huge boost of productivity to the deal process.
Usually these professionals are new to the company and are referred in. They each play a specialized, mutually exclusive role in the process but are mutually dependent on each other for the ultimate success of the process. The effectiveness and cohesiveness of this deal team is a leading indicator of how likely your deal is to close. If the team is hitting on all cylinders, they can anticipate roadblocks, develop work around solutions and keep all parties moving forward. If the team is weak, they are susceptible to adverse diligence events overtaking the energy of deal process.
The equation can be described as strong team = strong energy = strong process and a strong likelihood of closing. Smart acquirers understand this relationship and make the effort to hire the best advisors and develop a team concept and trust factor within this group. Common areas of imbalance emerge when scopes are ill-defined, and communication is suboptimal. At times, particularly on the legal side, an advisor will overexert their sphere of influence in the process. If a deal suddenly takes a highly legalistic turn, this can create unintended consequences, including more scrutiny, potential delays and higher legal costs.
The key to making the deal team hum is maintaining a business issues posture throughout and having an empowered businessperson, usually the financing advisor, manage the process. Financing advisors understand both the accounting, finance and legal sides of the transaction and are particularly skilled at managing all the parties through the process. Here are the Attract Capital Top 4 Tips to building a strong deal team.
- Pick High Quality Advisors with a track record of success – Deal acumen is formed through experience in the deal trenches and a long list of closings. Make sure you pick advisors that are skilled in your type of deal as it relates to size, structure and type.
- Define Roles Clearly – Each professional should have a strong idea of their respective scope. An early sync up call should be held to unify the group and exchange views on the process landscape.
- Bring in Leaders with Humility – Middle market deals require a win/win mindset for buyer-seller and lender to be successful. Advisors with humility are the best to achieve this outcome. They will make pragmatic and balanced decisions for their clients with a view toward getting the deal done.
- Focus on Proactive Advisors – The best advisors spot and solve issues before they become major problems. They set the energy level of the deal group and orchestrate process steps with efficiency.