In the fast-paced world of mergers & acquisitions, money is constantly moving as deals are being done. At least that’s what it looks like to the outside world. Inside the M&A ecosystem, any experienced practitioner will tell you that while deals and making moves are the main goal, a lot can get in the way of a smooth transition. The good news is, understanding and having access to data helps to overcome the multitude of roadblocks.
Data is the Deal
No one knows this better than Bill McCalpin, AM&AA member, CM&AA, and founder of two unique businesses born out of the need for data in deals: Capitalize Network and Dealware. Capitalize exists to help prepare a company for transition before the deal ever gets started, and Dealware facilitates deal flow through efficiency and information access.
In this article, we’ll outline how deals are driven by data, how these two companies are meeting the needs of M&A professionals, and we’ll peek behind the curtain of the M&A industry to see what goes into successful deals.
In the beginning portion of the buy/sell process, the pre-sale stage, you’re going to need data. Every M&A journey should begin with data collection. These data points include things like:
- What should the minimum sale price be for your business? That number will depend on what you, as a business owner, need to live on after you sell your business. It will also factor in your company’s current value, another needed data point that, as an owner, you may be overestimating. A wealth advisor can help you figure out the right number.
- What price are other companies getting in similar deal structures? Understanding this depends on identifying your likely buyer. Is it a private equity firm that’ll want to absorb you or a corporate strategic buyer who wants to grow and scale you? If your desired or needed minimum purchase price is higher than what you’re likely to be offered, it might be the right move to wait and grow your company’s value before going to market.
- What changes, if any, need to be made within a company to position it for sale? Here, an outsider’s expert perspective would be highly valuable to advise which actions will have the biggest impact on the final sale price, and what endeavors may be a waste of time. Experienced buyers can also tell you deal-killers that may be in your mix, and what your potential buyer will need to see and know to move forward.
McCalpin founded Capitalize Network to help provide these needed answers and connect business owners with the right experts during the pre-sale stage.
As a business founder, owner, buyer, and seller himself, he’s been through every stage of the process and learned the hard way how valuable wealth managers, attorneys, advisors, and access to data are in preparing a company for market. Capitalize has access to those who can advise on accumulating the necessary data for a particular company in the pre-sale stage. By being connected to AM&AA, the Capitalize network includes thousands of M&A advisor members who can help support the transaction through their expertise.
After successfully accumulating the data you need to begin a transaction, you may choose to enter the sale stage, where a myriad of due diligence items stand between you and a closed deal. Many professionals agree that in selling or acquiring companies, the due diligence stage is one of the most time and labor-intensive. According to an article published on the US Chamber of Commerce website, “due diligence in the M&A process should take no longer than 60 days but can often take longer…so mentally prepare yourself for 90 days.” McCalpin’s Dealware solution attempts to increase efficiency as it relates to the gathering and management of documents throughout the due diligence stage.
Dealware is a deal lifecycle software that tracks, manages, and analyzes due diligence processes. It’s a hub for task tracking, communication (both internally and externally), file storage and sharing, and timeline adherence.
About Dealware, McCalpin said “You can also examine the process after it’s over. Say we’ve done 6 deals now. Did they close on time? What percentage of time was it in our shop versus their shop? What were the 10 tasks that delayed close the most? Are those the same every time? There’s a level of visibility, analytics, and process improvement [provided by Dealware] that’s normally not possible with these complex projects.”
McCalpin used Dealware to break down and analyze a handful of deals, “all broken down by what every person did. It was 29,000 emails over 9.5 months, between 9 firms and 36 people. That’s a totally common deal in the middle market. You could never figure all that out with just Excel.”
The solutions provided by Capitalize and Dealware highlight how necessary data is in conducting M&A deals. In his expertise, McCalpin emphasized that while these companies can help facilitate deals, it will always remain necessary to be “super collaborative.”
Every transaction needs experts and advisors. To collaborate with the people you need for a successful transaction, connect with AM&AA. It’s a nationwide pool of industry experts who are passionate about getting deals done. Like McCalpin, they have the experience, insight, and resources needed to make deals happen successfully. And with Capitalize Network and Dealware helping facilitate transactions, the M&A market continues to grow and benefit business buyers and sellers alike.
Watch the full video interview between AM&AA and Bill McCalpin, taken at the 2022 AM&AA Summer Conference in Dallas, TX.