To perform M&A at the highest level, an ever-evolving M&A function is necessary. Organizations must focus on refining their strategies, processes, and team dynamics to ensure they can effectively navigate the complexities of each deal. In this article, Nate Lemmerman, Senior Vice President of Corporate Development at Cast & Crew, shares his experience and tips on how to build your M&A muscle.
“The more focused you are with your strategy, the easier it is to evaluate opportunities as they come up. It helps you do your job better and more effectively.” – Nate Lemmerman
Nate started his role by building an M&A function from scratch. The company wanted to diversify and grow its business, and they have concluded that M&A is the enabler of how they can achieve their overall company objectives. Through experience and repetition, they are able to build their M&A muscle and close multiple deals.
To improve the M&A process, there must be an emphasis on the strategy. The more detailed the strategy is, the easier it is for everyone to understand and filter the pipeline. There will be a lot of opportunities available, and it is crucial to avoid wasting time on deals that are not going anywhere.
Determine the growth priorities of the company with the team, both short-term and long-term, and align with key stakeholders on where the company will be in the next several years.
A successful M&A team consists of individuals with diverse skill sets, backgrounds, and experience levels. When hiring, look for candidates with complementary skills, such as a combination of deal and transaction experience and consulting backgrounds. Seek out individuals with expertise in M&A strategy and market research, as they can assist with identifying growth opportunities and developing sales strategies.
However, Nate doesn’t currently have a dedicated M&A team. He depends on cross-functional collaboration with key leaders to execute deals. According to him, creating a good relationship with in-house people and partnering with them can hugely contribute to M&A success.
Developing the team's diligence muscle requires working closely with the team to identify growth opportunities and cross-sell potential between the two companies. Collaborate with experts from various departments, such as technology and finance, to ensure a comprehensive evaluation of the target company.
Also, Nate encourages everyone on his team to do internal research and interview their existing customers to gather information on market trends and competitors. This will increase the team's knowledge of how to evaluate target companies.
Integration is often the most challenging aspect of M&A, especially for first-timers. To build the team’s integration muscle, develop a program that will standardize the back-office integration, such as combining financial systems, IT teams, and legal departments.
Also, develop a clear integration strategy and prioritize efforts from the top down, ensuring that all team members are aligned and focused on their respective tasks.