We help technology consulting clients achieve premium valuations with attractive deal structures through a process that emphasizes process risk mitigation. Our deep industry expertise, expansive relationships with the buyer community and unmatched understanding of the perspectives of acquiring firms provide a unique ability to execute optimal transactions.
Obtaining premium valuations requires getting to the buyers who’s needs match up best with the seller’s strengths, marketing those strengths on a customized, one-to-one basis, dealing with potential buyer concerns proactively to eliminate negative surprises, fostering a competitive bidding dynamic, utilizing industry experience to sense where buyer negotiation limits are and leveraging transactions experience to drive to those limits. Our exclusive industry focus and expansive buyer community relationships provide clear insight into the optimal potential buyers. Unlike the huge candidate list-oriented, mass email-driven and junior banker-led marketing approach of most banks, our model combines an appreciation of the unique business needs and individual personalities of buyers with a process where all contact is made by a Managing Director-level banker. As a result, we leverage proprietary relationships and transaction negotiation experience to drive premium valuations for our clients.
Attractive Deal Structures:
A premium value deal with a subpar structure may be completely unattractive. Contingent vs. guaranteed purchase price, liquid vs. illiquid purchase consideration, non-compete provisions, tax treatment, escrow holdback features and potential post-closing purchase price forfeiture are some of the critical deal structure elements that must be carefully evaluated in conjunction with potential purchase price. These structural points are dealt with in an industry-specific manner because of the unique risk profile presented by technology consulting firms’ relative lack of long-term, committed, recurring revenue and heavy reliance on human capital retention. Our extensive technology consulting industry transaction experience and unusual appreciation for the perspectives of industry acquirers position us exceptionally well to negotiate attractive structures to go with premium valuations.
Process Risk Mitigation:
Technology consulting firm sellers face unique transaction process risks not found to the same degree in other industries. Because enterprise value resides almost entirely in the firm’s people, M&A marketing efforts can bring a high degree of risk in three areas:
- Premature disclosure to employees, increasing risk of flight to competitors.
- Premature disclosure to clients & prospects, increasing risk of competitive switching.
- Disclosure of competitively sensitive information to unsuccessful suitors, increasing risk of key employee, client and prospect recruitment.
Mitigating these risks requires extensive industry-specific transaction experience. We leverage this experience to:
- Minimize the size of candidate lists through clear insight into strategic fit. Bankers who don’t truly understand this market work from huge candidate lists under the view that throwing enough darts will eventually find a target. However, this ignores the resultant market disclosure risks from broadcasting the opportunity to a wide swath of buyers. The more people who know about the marketing effort, the great the chance of unauthorized disclosure making it back to employees, clients and prospects.
- Create contractual consequences to unauthorized disclosure through tough non-disclosure agreement provisions to provide employee hiring restrictions and prohibitions on information usage. Bankers who are not highly active in the industry do not understand market norms for these protections.
- Establish appropriate fences at various stages of the process to prevent premature disclosure of competitively sensitive information. Again, bankers who are not highly industry-experienced do not understand market norms for diligence information protection and are consequently taken advantage of by buyers who push prematurely for sensitive data.
- Compress the sales process timeline to reduce the likelihood of an unauthorized market disclosure. By working from established relationships and a proven, best practices-driven process, we are able to compress cycle times to get to closings more quickly than less experienced generalist bankers.