Combine & Conquer - Real World Wisdom - M&A with Doge Characteristics

There can be a million things on your mind while you are looking to acquire companies and trying to finetune your process and bid strategy. But, these three are the most important (and dare I say, the ones that matter)

• Be mindful of opportunity costs

• Strike up the conversation first

• Bid to win

Why? Because, the corpdev function ultimately has to do meaningful M&A for their organization, which furthers the organization’s interests. If that is not happening, then corpdev is not doing what it is intended to do.

Ask any corpdev or buyside team and you will know that for every deal that happens, there are several that fall apart. That is the natural order of things and hence, it is imperative that filtering mechanisms get good at culling out unlikely deals sooner than later. Otherwise, you just end up wasting time. Say no, say it often, say it sooner than later.

While filtering and saying no can help you focus your energies on the few deals that make sense to you, you want to be in control of the evaluation and engagement with the sellers. In sale processes and auctions in particular, there will be pressure on buyers to move fast, skimp on evaluation & diligence while having to compete on valuation & terms with other buyers. So, if you like a target company, strike up a conversation right away. By the time there is a sale process being run, you have lost all the advantage that a one to one conversation brings. Besides, one on one private conversations are best when you want to avoid unnecessary or premature disclosure of your M&A plans. Confidentiality is an asset - it cuts the risk of preemption by others or at the very least, muddying of waters. So, hide your claws and conversations.

And just as importantly, when you place your bid, bid such terms that will help you win. If you can’t win deals, because you low balled or gave unattractive terms, do bear in mind, all your effort till that point is essentially lost. Peak opportunity cost situation. If you have to low ball, coz you are a value buyer who knows their margin of safety, well do that in public markets. That place is filled with value buyers, who always buy at the bottom and sell at the top. When in M&A, bid to win.

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