Through our Buy-Side M&A advisory services, Harbor View has been executing outsourced Corporate Development work for Private Equity and Corporate clients throughout our fifteen-year history. Over the years we have identified best practices to help our clients get the most out of their buyside advisory relationships. Here are several that stand out:
1. Select an advisor with a well-defined process, technology and team to act in a truly full-service capacity from sourcing all the way through execution
There are many different approaches to conducting a buyside engagement. Technology tools can ensure that a search for prospects is well-targeted yet efficient and thorough. When you hire a team that does buyside work as a core service offering, you are more likely to have a well-honed process. A fully resourced team with deep transaction experience is well positioned to provide a more comprehensive service that can manage elements of buyside M&A that make sense to outsource, for example drafting deal memos, managing diligence workstreams, performing customer analysis and evaluating competitive positioning.
2. If your investment thesis includes a programmatic approach to M&A, get things started right and consider beginning early
At Harbor View, we have had success launching add-on acquisition efforts as early as platform LOI execution, which has the benefit of validating a buy and build thesis during diligence. It also allows the team to hit the ground running with a robust add-on prospect pipeline as soon as the transaction closes. Other best practices for getting an acquisition program started well include leveraging an M&A playbook with standardized templates for IOIs, LOIs and Investment Committee deal memos. We would also recommend prioritizing integration experience when rounding out the executive team at the portfolio company and start with an acquisition that is of a manageable size, before exploring larger transactions.
3. Invest in the upfront strategy work
Our approach to corporate development work has always centered on the intersection of strategic consulting and investment banking, so we are big believers in the power of upfront strategy work. Even with an early start, time is of the essence when you plan to execute and integrate multiple acquisitions within a standard 3 to 5-year hold period. A thoughtful approach to strategic priorities helps to direct the focus and avoid unnecessary time spent pursuing targets that prove to be a strategic misfit. Additionally, that early work spent on strategic planning will help inform a thoughtful approach to outreach that will differentiate your opportunity to a prospective target. When your buyside advisor is armed with a clear strategic direction and they take the time to do their research before reaching out to a prospective seller, the response rate is significantly higher and the resulting pipeline is of a much higher quality. We believe this is the most important differentiator that determines a successful process.
4. Keep priming the pump and play the long game
Finally, it is extremely important that outreach continues even after some promising targets have been engaged and are proceeding through the funnel. A pipeline that was once robust can easily go stale if your process lacks consistency. Someone needs to stay in touch with potential prospects who were contacted early in the process. Timing is everything. When a target is ready to pursue M&A conversations, you want to still be top of mind. A Private Equity partner who remains consistently engaged throughout the process is an important factor in getting the most out of the collaboration.
At Harbor View Advisors, our Catalyst for Corporate Development practice augments Private Equity and internal M&A teams to provide a proactive strategy to source, execute and integrate growth through acquisitions. We bring a listen-first approach to establishing objectives, prioritizing acquisition targets, and launching an initiative that results in high impact transactions.
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.
