Modern Deals Series Part 1: Deal Strategy

“Each deal must have its own strategic logic. In our experience, acquirers in the most successful deals have specific, well-articulated value creation ideas going in.” - McKinsey

The beginning of any transaction’s lifecycle is the strategic rationale behind it. Naturally, there is no point in starting without the ‘why’. 

M&A has taken on a growing importance in a post-COVID climate, as more businesses have had to restructure and grow to survive and thrive. Developing and executing on these M&A strategies is what will help boost global economies out of their slump. The challenge for both buy-side and sell-side teams is to turn their strategies into actionable plans with measurable objectives. 
 
Modern dealmakers are turning to purpose-built deal tools to validate, support and execute their deal strategies. Here’s how.
 

Buy-side strategies: The old way

Corporate development teams might have any number of strategies in place ahead of pursuing acquisitions. Whether it’s a buy-and-build strategy to grow the business, expand into new regions or acquire new technologies or talent, there could be several potential targets that appear to meet the criteria of their growth strategy.
 
But choosing which targets to pursue and finding the most logical fits comes down to vetting them carefully. Similarly, PE and VC firms seeking to improve a target company’s performance must do their research to establish strategic fit before anything else.
 
To determine if an opportunity is worth pursuing, internal teams need to assess what the target company can deliver to them in terms of synergies and market value. This process involves extensive research, connecting with the C-suite, creating one-page value propositions, getting referrals and more.
 
The risk lies in doing this strategic assessment improperly; missing information from lost emails or out-of-date spreadsheets, duplicate work, and general lack of visibility of progress are all barriers to a full and comprehensive assessment which can impact long-term value. And the longer these processes take, the more competition the buy-side will face for an attractive target.
 

Buy-side strategies: The modern way

Ansarada’s Deal Workflow™ is a deal-focused project management tool transforming the way modern buy-side teams validate their strategies. These digitized, customizable checklists turn your regular static spreadsheets into real-time, living sources of truth that can help automate these collaborative processes with task assignment, deadlines, notifications and more.  
 
By centralizing all this information in a dashboard, buy-side teams get visibility into progress across multiple opportunities, so they can quickly and easily see which ones are worth pursuing to the end. Best of all, housing this early strategic work into a single Deals platform means the information is accessible and can be put to use in later stages – including an eventual seamless transition into a Virtual Data Room, and post-acquisition integration.
 
“The end-to-end solution is attractive. It is not just a data room. You can run a deal completion workflow through it… [You have] the ability to access it from anywhere, the ability to tailor it and manipulate it, the ability to replicate and duplicate it. So, once you have a system set up, you do not have to start from scratch every time,” said Rohan Harris, Corporate Partner / Innovation Principal, Russell Kennedy Lawyers.
 
Creating a standardized way for buy-side teams to manage their strategic assessments builds continuity and efficiencies, and eliminates the risk of making poor decisions early on in the process. 
 

Sell-side strategies: Legacy practices

For sell-side companies or asset managers with divestment options, strategy comes down to being ready for all possible scenarios. That readiness comes from having complete visibility over all your assets. Without an understanding of how each asset is performing, sell-side teams are at risk of missing opportunities and failing to reach their highest potential valuation.

Regular strategic reviews are a means to establish what aligns - or doesn’t align - with the overarching strategy. They can help in building a roadmap on what to divest, and when. But getting in-depth visibility over all this information, across multiple assets, is a huge challenge when it is housed in different places, in different formats, and by different owners.

It’s nearly impossible to get the full picture when this information is manually gathered in emails and spreadsheets, which quickly become out of date and irrelevant. 
 

Sell-side strategies: The evolution 

To orchestrate strategic reviews and unlock maximum value, this activity must be centralized. Using a modern Deals platform allows sell-side teams to house all their critical information in real-time, so they can analyze their most promising opportunities efficiently and in depth.
 
Ansarada’s Deal Workflow™ tool can be used to centralize all this information, giving sell-side teams a dashboard overview and visibility into performance across multiple assets. Once an opportunity is flagged, this information is accessible and ready to put to work in minutes, either to be shared with external teams or vetted further by internal ones.

“Confidence in your decision-making strategy comes from getting full visibility into all aspects of a business and its performance metrics, so you know there aren’t going to be any unwelcome surprises," said Sam Riley, Ansarada CEO. "You can see exactly where the gaps are long before going to sale. The end result is going to be a seamless due diligence process and a high valuation.”