We all want to feel special, to believe we make a difference, that we contribute to society whether it be through job creation, volunteering our time or some other means. M&A is no different. Target company CEOs and management teams want to feel loved. This is especially true of founder CEOs. Should a founder CEO wish to sell his/her business, they will want to be fairly compensated, but will also care deeply about what life will look like post-deal. For example:
- “Who will my team report to?”
- “What do you (the acquirer) know about my business? My industry?”
- “Will you invest in my industry/ do you have a history of making acquisitions in the industry?”
- “What will Sales cross-training look like?”
- “What if I become disabled and am unable to fulfill my duties?”
- “How will myself and key employees be compensated? Upfront vs. performance-based compensation split?”
- “What are performance-based metrics based upon – Revs vs. EBITDA vs. Bookings..?”
To generate goodwill with a target company, persuade them that you care about their business and broader industry. This requires a bit of work if the target company plays in a market different from your core business.
Convince the target company that an acquisition is more than a financial transaction. Learn the target company’s background and get to know the background of the founders/ management team, especially what they value and what motivates them. Effective communication begins with effective listening. Listening is work.
Know your business. Articulate what makes your firm unique. What unique attributes does your firm possess? Assume every potential strategic acquirer and PE firm is interested in the target company you desire. What makes your firm different from the rest? Post-deal, how is your firm uniquely qualified to drive synergies between the two companies?
Learn something about the country the target company resides in to avoid cultural gaffes. Ask co-workers who may reside in that geography. Books and newspapers are an effective resource. This should take place before meeting a company for the first time.