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When business owners and management at small and mid-size companies engage discussions with financial or strategic investors, they embark on a journey that they often vastly underestimate, both in its complexity and its duration, because they have never experienced it before.

There is not question that management knows the company and its history best. However, launching M&A activities at the right time, telling the right story, finding the right investor, agreeing on the right price, and moving together with the right strategy: a flawless execution is challenging, especially when business owners are doing it for the first time (which is often the last).

Apart from “trying to do it alone”, the most common mistakes are:

  • Launching the initiative at the wrong time, when the company is not sellable yet
  • Lacking alignment within management on what the ideal investor should bring, and the trade-offs between financial and strategic investors
  • Lacking a clear and executable strategy for developing the company to the next stage.

External M&A advisors can greatly help make the process more successful. They provide a sounding board and reality-check to management and their expectations. They can help management define the right story and clarify the strategic options moving forward.

In addition to preparing high-quality and convincing Information Memoranda, Investaura consultants bring the industry experience necessary to achieve the best result. The preparation of commercial and financial factbooks brings numerous benefits and greatly improves the M&A transaction outcome:

  • it provides a robust five-year plan that has been challenged and improved by the external advisor
  • it aligns the internal management team so that the company leaders all share the same understanding of what the company has achieved in the recent past, and where it wants to go
  • it makes the past, present and future commercial and financial objectives transparent to potential investors
  • it helps achieve a higher valuation for the company at the negotiation stage.

Commercial and financial factbooks developed by Investaura consultants have successfully contributed to recent M&A transactions, such as the acquisition of UTS, a telecoms operator, by Liberty Latin America from the country of Curacao, and the acquisition of Fuxtec, an e-commerce company, by an investor backed by a family business – both closed in 2019.