Mergers and acquisitions (M&As) are challenging mazes to navigate. Beyond any financial considerations, one of the biggest questions small business owners have is whether their ventures will be in good hands. You've spent years building your organization and team. How can you help ensure you're making the best decision? Here are some tips for choosing merger and acquisition partners that are the right fit for your business:
Find Alignment Around Growth Goals
Growth is one of the biggest reasons to explore an M&A opportunity. If you and your potential partner pursue common markets, product development plans and approaches to reaching customers, you may be able to create new opportunities together that didn't previously exist separately. For instance, you might gain access to product development resources, a new customer base or different product integrations.
Look for potential partners, subsidiaries and acquirers with long-term objectives that are similar to your organization's. Before entering into any M&A conversation, evaluate whether all parties are on the same page. For example, what are your customer acquisition strategies and revenue goals? Consider ways you could become stronger, more influential and more powerful businesses together: Interview one another and touch base on long-term objectives. If your answers begin to differ, you'll need to assess why and determine whether the M&A is still the right course of action.
Identify Shared Values and Professional Passions
For small businesses, an M&A offer is more than an exit. You've spent years pouring your heart and soul into your venture, bringing initiatives to profitability from the ground up. While venture capitalists (VCs) who support startups may pressure them to approach a liquidity event, small business owners have different considerations than VCs. Will your products maintain their integrity? Will your customers remain happy? Will your business continue to exist five years from now, or will your partner scrap it for parts?
These questions should remain at the forefront of any M&A conversation. Your values and passions are what contributed to your business's success in the first place, so make sure your partners are on board, too.
Throughout the vetting process, ask: What do you care about? M&A partners should answer this question openly and freely to check if their business values, which underscore the backbone of the company, remain aligned.
Know What's Best for the Business
When choosing merger and acquisition partners, you need to separate their personal and professional aspirations. Here, you need to answer one question: What's best for the business? Your employees, customers and investors are all stakeholders in your M&A deal, so answer this question from all three perspectives to understand the trade-offs you'll make in this new business phase. For instance, you may be going through an acquisition, and your buyer may want you to stay on for a year — even if you don't want to.
Lastly, when choosing merger and acquisition partners, don't make your decision alone. Rely on the guidance of trusted advisers to help guide you in making the decision that's best for your business.
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