Today, CEOs of successful, middle-market businesses are often in the drivers seat when it comes to M&A. There are plenty of private equity investors and strategic buyers in the mix chomping at the bit to make a deal, and the competition for the acquisition of good companies is stiff.
The good news for investors today? Mergermarket’s half-year 2014 edition of Deal Drivers Americas reports that more CEOs are willing to consider M&A now.
According to the report, “the game changer is CEO and boardroom confidence; these leaders are the driving forces behind US companies’ renewed acquisitive stance. As firms continue to purchase targets that will help boost product offerings and expand geographically, executives’ competitive streaks are kicking in and have resulted in a market that is in the midst of a buying spree.”
So what can private equity investors do to stand out from the pack, especially when strategic buyers are eager to pay higher valuations? Remember that first impressions matter. When meeting potential sellers for the first time, keep in mind that today’s CEO is looking for an investor or buyer who:
1. Has prepared for the meeting in advance. They have done their homework, reviewed the offering documents with a fine-tooth comb and know the right questions to ask.
2. Maintains utmost confidentiality. They know CEOs don’t want word to leak out to employees, customers, competitors and vendors until a deal is done. Loose lips sink ships – and deals.
3. Listens and stays engaged through the entire meeting. They understand that the CEO’s time is valuable and that the seller may take offense if a buyer interrupts the conversation to take another call or reply to a text or email.
4. Is straightforward with nothing to hide. They are looking to build rapport and establish trust during this initial meeting. They know a CEO’s trust may be jeopardized if they feel the buyer is holding something back.
5. They like! They appreciate the fact that most CEOs have a vested interest in the future success of the business, especially regarding their dedicated employees. Good chemistry matters, because it often means the seller and buyer are on the same page, and in some cases, it may even trump a higher valuation.
Finding and closing the right opportunity isn’t always easy. But if you put a laser-like focus on the CEO and his or her needs, you’ll be one step closer to success.
Photo Source: © m3ron - Fotolia.com