Not every company is a serial acquirer. Some companies are opportunistic buyers, and some are in a tiny industry where there aren't many deals available. So what do corporate development teams look like in these companies? In this article, Peter Linas, CPO & EVP Corporate Development at Bullhorn, discusses how their M&A team functions in an infrequent acquisition environment.
"Never under-resource any project because if they're under-resourced, you have a huge capacity for things to go wrong, and it's hard to win your way back." - Peter Linas
Because they're in a small market, Peter has only two people in his corporate development team, including himself. They only make one to three acquisitions a year and are always tracking a relatively small number of targets. Peter already knows what they want to buy, and if a company hits a certain scale, that's when they approach to buy.
According to Peter, the four keys to success in any deal are the HR, legal, finance, and corporate development teams. As mentioned before, only two people are dedicated to corporate development functions. They only scale their team when a deal is in the pipeline. If they are going to pursue a deal, they start picking teams pre-LOI. Team harmony is crucial in any deal success.
However, the most crucial part of the deal is integration, and choosing the right integration lead is extremely important. This person doesn't have to have massive experience in integration planning, but they need to know the business very well. Ideally, the integration lead should come from the business unit and start integration planning as soon as they get under LOI.
"The key person in any deal is the integration lead that completely understands your business. Someone who can deal cross-functionally to make the efficiencies that need to be made and ensure success." Peter Linas
Hiring external professionals is a must when you have a small M&A team. It is important that you don't burn your internal people out as it will negatively affect your core business and the transaction.
The number of external parties needed is dependent on the size of the deal. The bigger the deal, the more experts they will need. Typically, they need market expert advisors, tax advisors, and technology experts to do legal diligence.
Ironically, they have never used a banker for sourcing. After they find a target, they bring in bankers and only use their expertise to manage the diligence process and negotiate.
When it comes to integration, they start planning as soon as they get under LOI. They involve the seller as much as they can, and they focus on the people. Peter believes that no matter what it is that you're buying, you should always involve people. You have to give people confidence that they have a great future in your company. In a small industry like theirs, reputation is everything. Being a good acquirer will help you with future acquisitions, so a solid reputation must be maintained.
Peter believes that as soon as you integrate, the sooner you get to the ultimate goal of the deal, and there is no point prolonging that.