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As a business leader, making M&A commitments is one of the most important and difficult decisions one can make as the results have long-term implications for customers, prospects, employees and the entire industry. In addition to complexity, this year the world continues to battle a global pandemic that knows no boundaries and no end – making leaders even more unsure of whether or not to dive head first into bigger business.
From personal experience, the risk is worth the reward. Earlier this year, as the CEO of a global software security company that works with technology brands like SAP, Salesforce, and some of the world's leading financial institutions, our team decided to take the plunge and enter into a $ 1.15 billion M&A deal with a private company complete investor. While some thoughts flowed into the idea at the end of 2019, the last phases of the business were carried out at the beginning of Covid-19, which affected almost every point of contact with our partners. This was the second time we closed an M&A deal. However, the circumstances and teachings were certainly different.
As we enter a new phase of doing business around the world, I want to share some key lessons learned from this once in a lifetime experience as it really is useful for navigating a crucial turning point in a company's journey.
Be nimble, move fast, and stay firm
Traditionally, when entering into an M&A deal, business leaders have several face-to-face meetings with their investors. This is a general part of the process that will help build relationships and iron out final details. When we finalized our company's mega-deal earlier this year, we didn't have that luxury – in fact, we did it against the backdrop of a major global pandemic.
As a result of Covid-19, the process was set to steroids for these specific M&A negotiations. We knew we were running against the clock – flights were canceled, travel bans introduced – so we started a "flash process" to recruit the world's leading private equity firms. We met some of them and told them to take two weeks to look at our company and decide. The speed added to the excitement and momentum we built, and added an added element of stress given the escalated schedules and the urgency on both ends to cement the next steps.
Related: 4 Principles To Sell Your Business From Steve Little To The Mergers …
To add to the increasingly stressful equation, the Dow fell 10 percent on the day of investor competitor bidding on a trading day, making Black Thursday March 12 the fourth worst day for stocks in history. Despite the end of the world, we finally closed the deal. It was terrifying and yet exciting at the same time.
As with any successful business, obstacles are to be overcome. As a company manager, you never know 100% what is “right” at that moment. However, if you are flexible in some of the details, move quickly in the face of adversity, and hold onto key values, you have a greater chance of success throughout the process.
Assume the right attitude
Most successful business leaders don't plan to start a business to sell. With this mentality, they prepare for a possible failure. However, at every stage of the journey, leaders should have a very clear understanding of what they want to do next with their company, and I personally believe that the most successful organizations will be with them in the long run (which is a big reason we decided that PE route). Our goal wasn't to hit $ 1 billion or let a bigger company buy us out. We know we are at the heart of the software security market, and this deal was more of an endorsement of that.
During the M&A process – starting from the very early discussions – I focused on one thing: keeping the core values of our company intact. I wanted to continue our tight culture, commitment to customers, and drive to create a safer business environment. I never saw the deal as an exit, but as a refueling stop. We're refueling for the next 300 miles to hone our skills and reach more organizations around the world at a time when software security is most needed.
Related: Mergers Can Mean More Money, But You Can't Get A Price For …
Know your mindset before M&A deliberations even begin. Remain steadfastly committed to it. Not only does this help the directors stay focused throughout the M&A process, but it also helps build closer relationships with the employees as they embark on the journey with you.
Speak, speak, go
A global pandemic is certainly no small matter, but throughout the obstacle, it's important to keep your business growing. It is all the more important to develop innovations in order to stay at the forefront of emerging trends at particularly transformative times.
Show your achievements publicly. Let clients be your advocate. The best executives create an indescribable atmosphere in their respective industries that attracts investors – it's the idea that you are the next big thing, the next unicorn. If you have the conversation and go the way, you have a greater chance of picking the best investor who fits your business goals.
Ultimately, successful M&A deals are all about relationships. First you need to dress your type. You need to do this by showcasing your achievements, having great references, and providing impetus to ultimately create a pool of potential investors who want to talk to you. From there the "dating" process begins. You will have a lot of conversations until you finally find the one to marry. It's a lifelong, permanent choice, and this story should serve as evidence that it is still possible in the midst of a pandemic or other challenge you may encounter on your journey.
Related: M&A comes to cannabis. And that's good.