Neal McNamara, Co-Founder of Virtas Partners, visualizes the steps of a divestiture from an accounting perspective.
Divestiture starts with defining your deal perimeter. This then drives the financial structure that is needed for the deal.
Neal McNamara, Co-Founder of Virtas Partners, describes the difficulties when preparing companies for a carveout.
Carve outs are difficult because you are essentially selling a business that has never been looked at as a stand alone business before.
Neal McNamara, Co-Founder of Virtas Partners, explains what a tax free spinoff is.
A tax free spinoff is when a company carves an entity out of their organization and creates a new entity out of that business unit. The parent company issues existing shareholders new shares for the new business unit, in exchange for their shares in the parent company.
Neal McNamara, Co-Founder of Virtas Partners, discusses what Quality of Earning is and how it can impact the deal.
QofEs are typically done to reduce surprises when the buyer performs their due diligence. It can also reduce the timeline of the buyer’s due diligence and the seller having more credibility, but only if the QofE is done properly.
Neal McNamara, Co-Founder of Virtas Partners, shares a story of how important management consultants and being fully prepared for a sale is.
Management consultants are crucial to fully prepare your business for sale. An underprepared company without a proper QofE will have a lower price in the market rather than a fully prepared business with a fully vetted QofE.
Neal McNamara, Co-Founder of Virtas Partners, shares is the biggest challenge when he is working on divestitures.
One of the biggest challenges in a divestiture is when the client/target company withholds information from the consultants. This slows down the process and promotes discrepancies in numbers. Also, when the consultants are left out in the forecast and going to market without their approval.
Ivan Golubic, Executive Director of Gamma Corporate Development, maps out the steps of an ideal joint venture.
Ideally, both parties should approach the joint venture with trust and good faith. Define the KPIs and objectives of the JV so you can track progress. Select the leadership team so you can have a separate culture from the parent companies. Then create governance together with the roles and responsibilities of each parent. Lastly, exit strategy if things don’t work out.
Ivan Golubic, Executive Director of Gamma Corporate Development, discusses how to get strategic alignment on both parties in a joint venture.
Strategies for each parent may vary, but it is important that you follow your own strategy and not worry about your partner. Be clear upfront about your rationale for entering the JV to make sure you are not competing with each other.
Ivan Golubic, Executive Director of Gamma Corporate Development, explains how to make your joint ventures more successful from the very beginning.
The first thing to make your JVs more successful, is to clearly define what success looks like from the very beginning. Set a strict governance process and have the difficult conversations while you are still friends, not after you get in a fight.
Erik Levy, Group Head Corporate Development and M&A at DMGT, shares his key considerations when executing the valuation, diligence and integration of the deal.
When it comes to executing valuation, diligence and integration, you need to take into account the go-to-market strategy. Develop your revenue synergies and take into account the integration cost to achieve those synergies.
Erik Levy, Group Head Corporate Development and M&A at DMGT, explains that valuation, diligence and integration are all linked with one another. And while a successful valuation can drive a successful integration, a successful integration and diligence can also lead to a successful valuation.
Erik Levy, Group Head Corporate Development and M&A at DMGT, describes the stages of valuation on different phases of the deal.
Valuations may vary depending on the deal stage. In the beginning when you have limited access to data, you can only do a high level valuation based on your hypothesis. But as you progress deeper into the deal, you will get a more detailed valuation model based on diligence.
Javid Moosaji, M&A Sales Integration Strategy at Paypal, and Carlos Cesta, VP, Corp Dev M&A at Presidio, shares that leading M&A with integration means executing the entire deal with integration in mind. This means bringing the integration lead as early as possible and planning the integration in the diligence phase.
Javid Moosaji, M&A Sales Integration Strategy at Paypal, and Carlos Cesta, VP, Corporate Development M&A at Presidio, talks about the criteria that you should consider when you are looking to hire an integration leader.
The integration leader can’t be just a project manager. It needs to be someone who has a good business background like a COO or a GM type of person. Someone who has the right credibility and influence on people to lead the charge for your integration.
Javid Moosaji, M&A Sales Integration Strategy at Paypal, talks passionately about go-to-market strategy.
Go-to-market planning should be at the forefront of your process. Most acquisitions rely on growth from the combination of customers or products. Which is why you have to determine the customers that you’re serving. After you have identified that, the rest will follow.
Cross border integration can be complicated mainly because of cultural differences. Customer-base differences could also prevent you from achieving certain synergies. This is why you need someone who has a clear understanding of the target company’s culture.
Valeria Strappa, Head of M&A Integrations and Client Relationship Management at JPMorgan Chase & Co, walks us through how she performs cultural integration post close.
As you close the deal, a conversation between CEO to CEO needs to happen about the behaviors and processes that you want to keep, and you want to replace for the target company. Transparency and balance are key. You want to keep what makes the target company efficient while getting your synergies. After day one, put emphasis on these agreed changes and make sure they are enforced.
Valeria Strappa, Head of M&A Integrations and Client Relationship Management at JPMorgan Chase & Co, teaches us how to do an effective cultural integration.
Understanding the culture of the target company is the first step to integration. Talk to the people and understand what’s important to them, how they make decisions, how they compensate their people. And from there, you can choose what behaviors you want to preserve and you don’t want to see anymore.
Valeria Strappa, Head of M&A Integrations and Client Relationship Management at JPMorgan Chase & Co, believes that culture is extremely important and you should integrate cultures even before you close the deal.
Cultural integration should start even before the deal closes. Culture manifests in behaviors, assessments, and processes. You have to go deep to understand the target company’s culture.
Devorah Bertucci, Corporate Development at Microsoft, like to bring HR early in the process to help assess the target’s culture and bring up some of the HR-related risks early in the process.
Every negotiation is different, and it will all depend on the target company. They could be a serial entrepreneur, bankrupt, or happy to be acquired, and it will all dictate how you can approach the deal.
Each scenario is unique which will affect negotiation styles, and in turn, affect deal terms. Devorah Bertucci, Corporate Development at Microsoft, tells us why here.
Kim Jones, SR. HR M&A Manager at Microsoft, shares their organizational deep-dive strategy on how they get to know the culture of the target company. Talking to the people of the target company is the best way to understand their culture. Holding an event for everyone to gather and meet everyone else is crucial for success.
Most people are worried about short-term issues like the price, speed of execution, and certainty to close.
In this video, Devorah Bertucci, Corporate Development at Microsoft, talks about these short-term concerns and that they should really be worried about long-term issues like employment offers post-term sheets.
Scott Kaeser, Owner and Head Of Corporate Development at First Choice Dental Lab, shares how they evaluate the attractiveness of a target company. Depending on your deal rationale, it could be the product itself, size of the company, IRR, EBITDA, and other metrics.
Sean Corcoran, Head of Corporate Development & M&A at Neustar, admits that defining success is not only difficult but also subjective. However, you can measure
certain phases of the deal by using milestones.
Sean Corcoran, Head of Corporate Development & M&A at Neustar, talks about deal prioritization on the corporate development’s list. You need to take emotions out when you are filtering your target list. Set strategic and financial criteria to simplify your process.
Scott Kaeser, Owner & Head Of Corporate Development at First Choice Dental Lab, talks about the importance of building a target database for corporate development folks. It has to be active and continuously updating as your role progresses in the marketplace.
Sean Corcoran, Head of Corporate Development & M&A at Neustar, explains why it is in your best interest that everyone involved understands what you are trying to achieve by doing the deal.
In this interview, Kison will be speaking with Mike Palumbo, Director of Corporate Development at Halo Branded Solutions. He is a corporate development and M&A professional with more than nine years of exposure to the finance, operations and executive leadership departments of middle-market companies. Together they'll be discussing the many various ways you can improve your M&A process by getting deals done in a repeatable, sustainable way.