You might not realise it but each Acquisition has an implicit Divestment on the other side of that coin ! It is this logical reality that makes dealmaking such a difficult and special process. It requires expertise and experience to be successful. Acquisitions & Divestments Dealmaking is a profession !
Where most executives consider the closure of an acquisition a confirmation of strategy & strength, one could argue that an acquisition confirms that management is not able to achieve what was needed. To fulfil the company strategy the next best option is to acquire what management had not been able to create themselves.
Since an Acquisitions and/or Divestments are processes that create high risk for companies and risk awareness elevated, traditionally managed through due diligence and legal documentation. In our experience these two are important, but the real risk is embedded and hidden in the process it-selves. The eagerness to close the deal and the parties interest to keep momentum or reach deadlines & targets are the biggest enemies of a good deal. Just as the concept that only the best deal is a deal to accept! The best deal might never happen and with hindsight the next to best deal was good enough to have agreed to.
Evaluating the closure from the Divestment side of the transaction brings a different state of mind to the table. Divesting a business simplicity confirms the management was not able make the maximum value out of strategic relevance themselves. The value of being acquired exceeds the expected value of running the business themselves. The logical preparation for divestment is to harvest from the deal and maximise short term value. However one could argue that validation of long term potential of the business is as important; that validation would indicate the value for then new owner.
The art of the transaction is to bring together fact’s, feelings, figures, expectations, relations. At the same time one need to cope with the tension of negotiations and remain momentum up to completion of the legal documentation. The Latter requires “deal” experience, negotiation exposure, the ability to orchestrate the process, creativity and improvisation skills.
A good deal finds it’s origin in the strategic fit, the deal structure and the negotiated result. The value in the deal is created through a good balance between facts, feelings and figures and an unbiased process. The latter requires strategic skills, financial and analytical skills.
WHY SOLUTIONS INSIGHT?
It is working with the right people to make a transaction successful. The right team should have deal experience, financial and legel expertise and team members should be able to build a high trust relationship clients. Our real strengths are thoroughness, perseverance, creativity and the ability to close the best and next to best deal !
So in preparing a successful acquisition there is more then just strategic fit, and the price to be paid ! One needs to validate the management rationale including the risk that acquired value will evaporate after the deal is done. In the deal process one has to ensure that “eagerness” is recognised, by creating transparency on facts, figures, values. A deal should be based on “unbiased” expectations. Dealmaking is a profession !