Mergers and acquisitions (M&A) transactions can deliver tremendous growth for small-medium enterprises (SMEs) seeking rapid expansion, technology enhancements, or talent acquisitions. However, the M&A process requires meticulous planning and execution across target screening, due diligence, deal negotiation, legal and financial structuring, and post-merger integration.
Hiring an experienced M&A strategy consultant offers SMEs targeted guidance during this high-stakes process. As an entrepreneur who has spearheaded multiple small business M&A deals, I have firsthand experience vetting and working with M&A advisors.
Here are my top recommendations when evaluating consultants to partner with on your company‘s next deal:
Clearly Articulate Your M&A Rationale
Before reaching out to potential advisors, document key drivers spurring your acquisition interest using our M&A Rationale Template. Detail target criteria, timeline expectations, growth objectives, synergy opportunities, and cultural considerations. This overview will allow consultants to rapidly grasp your strategic vision and narrow candidate options.
Be transparent around any apprehensions you may have around M&A complexities as a small business owner. Addressing concerns upfront enables consultants to provide tailored guidance to your situation. According to The Harvard Business Review, a staggering 70-90% of mergers fail to meet expectations, making a trusted advisor essential.
Verify Extensive Experience Advising Small Business Deals
While many consultants tout general M&A expertise, few focus specifically on the small-medium enterprise realm. Seek out advisors with depth guiding deals under $50 million in value across your industry vertical. According to Deloitte, middle-market transaction complexity now rivals larger deals, making niche experience key.
Ask pointed questions around previous small business deals handled:
- How did you address financial structuring and fundraising for undercapitalized SMEs?
- How were growth goals balanced with cultural integration concerns?
- How were regulatory hurdles specific to small businesses navigated?
Targeted SME experience enables consultants to anticipate and smoothly navigate deal snags.
Vet Client References Thoroughly
When considering an M&A consultant, rigorously check client references. Speak directly to previous clients to garner transparent feedback on the advisor‘s communication approach, problem-solving skills, and deal execution successes.
Key questions to ask references:
- How effectively did the consultant synthesize complex issues into actionable strategic recommendations?
- Were you satisfied with the frequency and transparency of communications?
- Did the advisor deliver deals aligned to your growth objectives?
Per McKinsey, reference checks uncover 30% more vital insights versus relying solely on firm marketing.
Align on Cultural Values and Compatibility
Cultural alignment between consultant and client fosters greater collaboration and willingness to have candid, high-stakes conversations around deal complexities. Discuss working styles, communication cadences, leadership approaches, and problem-solving perspectives.
- Which cultural aspects are non-negotiable to preserve post-merger?
- How are tensions and setbacks constructively addressed?
Vetting culture fit early enables smoother partnerships during high-pressure deal environments.
Compare Fee Models and Deliverable Transparency
Fees amongst M&A consultants span fixed project rates, billable hours, and contingency structures. Clearly compare options and align on packaging working best for your budget. Enquire about how regularly scheduled consultations are handled.
Moreover, determine what tangible deliverables will be produced at each phase, from target screening reports to due diligence findings to detailed integration blueprints. Deliverable transparency reinforces value derived from engagements.
Establish Mutual Trust and Communicate Openly
Entering an M&A deal without safeguarding trust and transparency with your advisor introduces unnecessary risk. Foster candid, consistent communications around objectives, apprehensions, roadblocks and learned insights.
According to McKinsey, 96% of executives rank post-merger integration failures to issues around poor cultural meshing and change management. Having an advisor relationship grounded in trust enables free-flowing exchange to rapidly address issues.
By taking these recommendations to heart when selecting your small business M&A consultant, you lay the foundations for an informed, strategic partnership poised to guide you to deal success. With an advisor aligned on vision and dedicated to transparency at your side, your company can pursue deals with greater confidence and clarity.
