The term M&A stands for mergers and acquisitions.
Mergers & Acquisitions (M&A) is a strategy of entrepreneurs, businesses and investors to grow through buying businesses. By doing mergers and acquisitions, the buying party can realize economies of scale, cross-sell opportunities and other synergy benefits, often accelerating business growth (market share, revenue and/or profit).
Because big businesses always knew it: growing a business through acquisition is faster, cheaper and often less risky than expanding on your own. With the entry of private equity into the SME sector over the past decade, this penny has also dropped for more and more entrepreneurs. Acquiring one or more businesses has become a realistic way for SME entrepreneurs to grow.
Mergers and acquisitions
Mergers and acquisitions involve growth by merging two independent businesses through a change in ownership. Since most mergers are in fact also acquisitions, this is therefore primarily about growth through acquisition.
The advantages of acquisition growth are numerous: think of economies of scale and synergy, acquiring new markets, products and distribution channels, better opportunities for external financing and last but not least: eliminating a direct competitor.
M&A adviser
In an acquisition process, an M&A consultant or acquisition adviser is indispensable. He plays a central role, guides the process from beginning to end and knows how the game is played. He maps out the targets, approaches them, does the analysis and valuation, advises on an initial bid, conducts the negotiations and - if the deal is done - often also arranges the financing. In doing so, he hires external advisers, whom he also directs. These include specialists who do the due diligence and lawyers who draw up the contracts.
Another important function of an M&A adviser is that of a buffer between buyer and seller. Before you come to a transaction, there are tough negotiations. In the process, you also start saying what's not to like about the business, which often leads to irritation and resistance from the seller. After the deal, buyer and seller often have to go on together for a while, so that relationship should not be disturbed too much. That is why it is better to have an adviser in between.
With an M&A adviser, you also make a professional impression. This comes in handy, for example, when approaching targets or talking to the bank for financing. Advisers on the other side of the table - from the selling party - also much prefer to do business with a fellow adviser rather than an accountant or an independent contractor. With a colleague, they can "switch gears faster. In a competitive acquisition market, that's something to consider. Without an adviser, you are taken a lot less seriously.
M&A activities
Businesses and investors that make regular acquisitions often use an M&A Playbook. This describes step by step the tasks and responsibilities of everyone involved in an acquisition. In this way, they maintain an overview and direction.
Brookz has developed its own M&A Playbook for entrepreneurs. In the M&A Playbook, we go step by step through all the points of interest you need to consider when you want to acquire another business. It is a roadmap for the execution of a strategic acquisition. It provides overview and structure and ensures that nothing is overlooked.
We have broken down this strategic acquisition process into 6 phases:
- Strategy
- Dealsourcing
- Business case
- Due diligence
- Transaction
- Integration
Within each phase, we walk through, step by step, the key points to consider when acquiring another business. Supported with handy checklists, templates and useful tools!
Distressed M&A
A particular form of M&A is "distressed M&A. Distressed M&A is the acquisition of a business that has fallen on financial hard times. The continuity of the business is seriously threatened and a restructuring will have to be put in place with the help of outside parties to turn the tide.
Because of financial distress, the acquisition path in distressed M&A may differ from the path followed in a regular acquisition, in part because of the involvement of creditors.
