How you can save on search expenses and improve your results at the same time

Most acquirers agree that the biggest hurdle in the acquisition strategy is finding good deals. Huge expenses in resources, capital and time are spent to conduct hundreds of searches which often yield unpredictable results.  There are four basic limitation that prevents corporations from being as effective in finding good deals as their intermediary counter part.   

Corporate M&A teams are made up of experienced transaction handlers but are not search specialist.  Corporate M&A executives possess strong financial, negotiation and operational skills.  However, they often lack the ability to consistently find many good opportunities.  Intermediaries train extensively in this area because identifying the deal is the primary value that is offered to their clients.  Unless a deal is identified no other M&A activity can take place.  Traditionally, the search process has been the Achilles heel for most companies and intermediaries can guarantee the success of all parties by being competent in this area.  

The same cost and effort spent by an intermediary results in multiple transactions, while acquirer companies are limited to deals that fit only their specific acquisition requirements.  Having searched a thousand potential companies, five companies may be found that represent good deal candidates.  Usually, each company attributes will meet a unique deal category which can easily be satisfied by the intermediary.  However, the acquirer company will only benefit if a match is made but cannot take advantage of other transactions which represented good opportunities for other companies.          

Intermediaries are willing to invest funds to collect and maintain data on majority of private companies which greatly extend the market place for their clients while a single corporation is unable to justify the costs associated with collecting this information.  The disparity of sources for collecting accurate data on private companies which include newspaper, trade publication, other information provider and the companies themselves lends itself to be a daunting task.  However, in the highly competitive field of M&A, it is often the accuracy and timeliness of information on companies that gives one firm a competitive advantage over another.  

Relationships with sellers are establish by intermediaries well in advance of those companies being available for sale while acquiring companies become find out about sellers only after they are announced which may be too late.  Intermediaries realize that being first at finding future clients begins by establishing a relationship with those companies today.  These relationships are nurtured over time to create trust between the seller and the intermediary who has been preparing the seller on reaching the financial goals needed to sell their company.  Too many conflicts of interest prevent acquirers from establishing similar relationships with sellers or acting in the same capacity.  

Working with Franklin Hamilton can dramatically increase the number of deal candidates to review while reducing your expenses on the portion of the acquisition strategy which is best outsourced to an intermediary.