There are many long-term strategies you can adopt, sometimes years before a transaction, to enhance your M&A readiness.
In a recent interview with Plastics Today, PMCF Investment Banking Managing Director John Hart underscored how a well-planned M&A strategy can unlock significant value, regardless of economic conditions.
A successful sale isn’t a hasty decision; it’s often the result of a deliberate, and, in some cases, “a multi-year process that really starts with good planning,” Hart said in the interview.
In the article, Hart, along with Plante Moran’s David Stahl, discussed how a long-term approach can help you prepare on both the business and personal sides. This long-term approach allows owners to address critical areas that buyers will scrutinize, ensuring the company is positioned for a premium valuation when the time comes to sell. It also positions you to be best prepared for your personal objectives and needs post-transaction.
Three Pillars of M&A Readiness
Hart told Plastics Today one key aspect he focuses on in the Strategic Assessment process is three foundational pillars: shareholder alignment, company optimization, and market timing.
- Shareholder Alignment: For businesses with multiple owners, getting everyone on the same page is the first and most critical step.
- Company Optimization: A business must be operationally and financially sound to attract serious buyers. This involves ensuring a stable, multi-year track record of revenue and margin growth, optimizing capacity, upgrading facilities as needed, and strengthening finance and accounting functions. A strong, forward-looking story is essential to get a buyer excited about the company’s future potential.
- Market Timing: This pillar involves assessing macroeconomic factors, M&A market dynamics, and trends within specific plastics sub-sectors. While you can’t control the market, you can prepare your company to be attractive in any cycle.
Ideally, all three pillars align perfectly, Hart told Plastics Today. In reality, you may find that two are optimal while one is just okay. In many multi-year transactions, PMCF supports clients as they improve one or two of those aspects.
“We spend a lot of time positioning the current trends and outlook of the businesses that we are representing,” Hart said. “We show the buyers the different options available to the company and how they can continue to grow despite a little more uncertain environment than we’ve seen historically.”
To read the Plastics Today article, click here
To learn more about PMCF Investment Banking’s Plastics focus, click here
