Lessons from the M&A front-line: the seller's perspective

Sun, Nov 27 2016

I’m about to bungy jump off a postage stamp-sized platform 135m above the Nevis River in Queenstown, New Zealand, with only a rope secured around my ankles. I’m petrified but wired and determined that I will jump. I do.

Rebecca Wilson, WE Buchan

A few weeks before this, I took a leap of a different kind. I signed over a majority stake of Buchan Consulting to US-based WE Communications Inc., one of the world’s largest independent multinational communication businesses.  

These two, completely unrelated events, challenged me in very similar ways.

The future of Buchan Consulting, a business that has enjoyed great success for more than three decades, came down to these final few months of negotiations. We had to consider whether we should sell and become involved in something bigger or stay as we were; nimble, successful and independent. In the end we decided that being part of a highly respected global network offered broader opportunities to our team and clients and was important for our continued success.

I’ve worked on scores of merger and acquisition transactions over my career, but leading the transaction for Buchan Consulting was daunting and tested my mettle. Ultimately what made the transaction a success was the strong relationship that we’d built as a partner to WE over eight years, a willingness to compromise, and an open and transparent negotiation platform.

Here are my top six pieces of advice to other business leaders looking to create value for an acquirer, and get the best transaction deal possible:

1.    The courtship is as important as the marriage: There are compelling benefits to establishing a partnership well ahead of a transaction. For us it enabled both parties to complete ‘due diligence’ and ensure consistency across capabilities, leadership, reputation, and client focus. And most importantly was an alignment of cultural fit, values and business ethos. 

2.    A merger not takeover:  By true definition, our transaction was an acquisition, but neither party treated it as such. WE Communications recognised the value our leadership team could bring to its global network, and the strong contribution we could make within the APAC region in terms of people, leadership and experience. We never saw this transaction as an exit for the directors, and so the consideration was around the opportunity to play a role in the success of WE in the years to come. You may be looking for an exit and that’s fine, but recognise that negotiating for an exit versus a merger are very different scenarios and will have different impacts on value.

3.    Our differences were as appealing as our similarities: Like any relationship there are some non-negotiables and it’s important to consider these before starting the process. When it comes to capabilities and experience however, often it’s the differences that can be the most powerful. What Buchan Consulting offered WE was a strong and differentiated offering in investor relations and financial services communication which can bolt onto the global growth strategy for the years ahead. 

4.    The power of the “ask” goes beyond the dollars: The commercial terms of any M&A will ultimately seal or be the undoing of the deal, but don’t forget about value elsewhere. Are there areas of investment that you want included in the terms? For example, support for marketing, team incentives, training, or access to intellectual property. The time to ask is before closing the deal.

5.    ‘Niche’ is powerful (and valuable) but so is a ‘strong track record’: The highly specialised, niche service providers and disruptors in our industry are getting the attention with larger agencies swooping in at the higher end of valuations. Some commenters have signalled the death of traditional agencies, and for those that haven’t evolved this may be true. However, a strong track record of being able to pivot, adapt, and change over time; combined with strong leadership, growth and financial management, remains valuable and is well-regarded. The value of consistently delivering results is high. 

6.    Take your staff and clients on the ride: Our partnership with WE has always been about creating an opportunity for our team and our clients. If they don’t see what is in it for them it’s a difficult assignment for even the most brilliant communicator to message.

Happy hunting!

By Rebecca Wilson, WE Buchan