Quick sales often generate lower sales prices. Addressing issues within your organization’s structure, culture, processes and technology will make your business more sellable.

While acquisitions can happen quite quickly, most buyers want to do some form of due diligence. There are several ways to value a company including brand equity, customer lists, locations or recurring revenue focus on what an investor would be most interested in and look for a strategic fit in a buyer.

Taking a top-down look at your portfolio through the lens of an activist or private equity firm may help to identify potential divestitures or opportunities for acquisitions.

Hundred offers a “red flag review” of a business, providing a targeted overview assessing key aspects of the business and highlighting the main opportunities and threats. 

Should we go forward with in-flight deals?

As the impact of the COVID-19 pandemic continues to be felt, the economic landscape is marked by volatility and uncertainty. As in past crises, buyers have delayed or shelved their M&A plans due to Covid19, however the impact of the global pandemic of 2020 is not just on the financial system, valuation of sellers or buyer appetite.

With people working remotely, buyers, sellers and providers of M&A financing and all respective legal and financial advisors have had to adjust to the changed environment which will likely continue in some form for the foreseeable future.

Deal terms themselves have changed, new due diligence issues have arisen, the way due diligence is now conducted, the availability of deal financing and the ways in which we obtain necessary regulatory and third-party approvals for transactions have all changed.

Companies thinking about M&A in the post-pandemic world will need to consider some of the unique aspects to getting a deal done, such as:

• Cyber diligence – assessing the strength of the target’s IT vulnerability. This will increasingly become a focus area due to the accelerating reliance on technology

• Resilient supply chains –  resilient supply chains naturally have more redundancies than efficient supply chains, meaning they are more expensive and have fewer opportunities to cut costs

• Post-acquisition integration – Maintaining employee morale and engagement is critical, especially in the new hybrid working environment. Cultural change can be time-consuming and tricky to translate via videoconference call. Being considerate of working hours; ensuring various integration meetings stick to a reasonable timeframe; and infusing the process with the appropriate amount of “ice-breaker” activities are some ways to help

How do we work out which strategic M&A opportunities merit investment?

Success in programmatic M&A requires more than just executing on a long string of deals. Acquirers must articulate exactly why and where they need M&A activities to deliver on specific themes and objectives underlying their overarching corporate strategies. A company’s M&A strategy is usually the first step in the M&A process. This seeks to align the strategic vision with the business objectives.

At Hundred we have a clear five-step process to help our clients profile optimal acquisition targets:

1. A gap analysis exercise is performed to identify what is needed to capitalize on new business opportunities via
   • existing resources
   • forming a joint venture or strategic alliance with another company
   • seeking a merger or acquisition.

2. The company looks at its current status and future direction in terms of business objectives and desired benefits, usually in the form of a workshop

3. Based on objectives, a preliminary comprehensive list of target companies is developed which may offer the product portfolio diversification, talent, skills, technology, steady growth rate, history of innovation, market leadership or access to new geographies or markets that have been identified as desired outcomes during the gap analysis exercise.
4. This list is then filtered via external sources of information such as industry contacts, trade associations and desk research to provide a list of potential targets. This list is then filtered down further through internal intelligence such as senior executives, board members, sales and marketing personnel to provide a list of prioritized targets to consider.
5. A detailed target profile and business case is then created in partnership with the client which becomes part of the buyer’s institutional knowledge. The business case explains how the acqui­ring company plans to add value to the target or targets within a given M&A theme — for instance, the capital and expenditure required to integrate and scale the asset(s) and a preliminary integration plan for the acquired asset(s) e.g. all shared services will be absorbed by the acquirer, and the target company’s product portfolio will be cross-sold to the acquirer’s existing customers. It may also outline the internal operational changes and capabilities that are required to integrate the new assets,  such as the creation of a new business unit or a set of new business processes to manage an acquired digital platform.

Do we risk deployment of capital right now?

Historically, the M&A market has recovered from past economic crises, such as the burst of the dot-com bubble in 2000-2002 and the Great Recession of 2007-2009. Evidence from previous crises shows that companies that made significant acquisitions during an economic downturn outperformed those that did not. History suggests, therefore, that there will be a relatively short M&A window that opens as the Covid-19 crisis ends, during which bargains will be had by those with the liquidity and risk tolerance to move quickly.

At Hundred we have a clear three-stage portfolio optimization approach which we have successfully deployed with several major brands:

How do we assess risk, liquidity and resilience?

Many companies face cash flow, liquidity risks and financial challenges as a result of disrupted operations, higher operating costs and lost revenues due to Covid19.

At Hundred we help companies gain agility, speed and deep actionable insights through data analytics. Usually this includes:

• A diagnostic phase to identify and validate actionable improvement opportunities

• Identification of quick wins for rapid cash improvements and mobilization of employees to successfully deliver on project ambitions and objectives

Will the Covid19 crisis create a wave of industry consolidation?

Historically data suggests crises often trigger consolidation in sectors that bear the brunt of the impact, such as the banking and travel sectors during the global financial crisis of 2008. understanding who will drive consolidation and how to react is key to making good strategic decisions; understanding how this dynamic will affect suppliers, customers and competitors is also important.

Hundred provide a broad range of consultancy support from market reviews, specialist referencing, benchmarking and commercial turnarounds as well as specific technical or product assessments to help clients make sense of their new post-pandemic context.  Get in touch for more information.