It's a numbers game
Danescor clients complete more than 3 acquisitions per year
The buyer needs to identify the adviser with the sale mandate, ensure they are on the buyer list, and then win the auction process. Success rate < 3%.
Buyers need to access and research a myriad of costly private and public data sources, analysing vast quantities of data before approaching, engaging and negotiating with hundreds of potential targets.
A Danescor subscriber can access unrivalled market intelligence to construct a customised target acquisition universe, delivered through a market leading transaction application, enhanced by on tap dedicated and experienced M&A Professional Services.
Conversion rate increased by 30%
Timeline shortened by 35%
Costs reduced by 70%
Performance increased by 300%
The acquisition process
- Identify gaps in organic strategy
- Establish acquisition criteria
- Identify buyer attractions & approach
- Understand funding capability
- Evaluate M&A track record
Understand and/or establish long term corporate strategy identifying future key success factors (KSFs) based on dynamic market forces. Map KSFs to company’s resources and capabilities to identify gaps in terms of skills/products, customers & markets, capabilities & resources, scale & operations.
Develop effective search criteria and methodology to accurate identify target assets which address deficiencies and have the ability to deliver transaction synergies. Establish realistic approach to identify, prioritise and deliver synergy benefits both hard and soft.
Common Issues: Acquisition criteria is not realistic and does not align with long term corporate strategy. The target profile does not exist in meaningful numbers, is unaffordable and carries significant risk in delivering the expected synergies. An unrealistic timeframe is assigned to the project.
Why Danescor?: It is what we do! Danescor is expert in designing realistic and achievable M&A criteria that delivers on target synergies and transaction completions. Through a combination of expertise, sophisticated software and invaluable data, Danescor increases completion rates, identifies better matches, shortens transaction timelines and drives massive cost savings.
- Prioritise acquisition criteria
- Decide must haves and nice to haves
- Research and collate target universe
- Segment and prioritise
- Create transaction collateral and documentation
- Set-up project, strategy & reporting
Accurate definition around target market boundaries is crucial in researching for and identifying potential funnel populants. Collating, verifying and analysing relevant data on an industrial scale is imperative in creating the best fit target universe and avoiding wasting time and resources on poorly matched or unconvertible targets.
Accessing the “best data” through a wide range of public and private data sources together with leveraging established market relationships to maximise short-cuts can provide invaluable transaction efficiencies and enhanced success rates.
Common Issues: The breadth and scale of data to be accessed, processed and managed can become insurmountable for many organisations to progress effectively and optimally without employing significant external resource. Executing M&A transactions demands consistent management bandwidth which is often stretched by other operational requirements. Identifying suitable targets to pursue and focus on requires skill and experience.
Why Danescor?: Danescor’s extensive experience, resources, proprietary data and sophisticated software streamlines the activities necessary to produce and process acquisition funnels.
- Identify quick wins
- Embark on structured campaign
- Pursue skillful information gathering
- Identify deal killers early
- Build detailed target profile
- Reject and add new targets
- Maintain dynamic universe
- Build multi-year acquisition road map
Even the best prepared acquisition projects typically require processing hundreds of targets in order to deliver meaningful completions. Generating the desired response metrics and target engagement requires thought, preparation and consistent attention. Extracting the necessary information and intelligence particularly from off-market opportunities in order to make informed decisions requires experience, knowledge and insight as well as established networks and relationships.
Sophisticated systems and processes are essential to coordinate, prioritise and explore multiple avenues when it is unclear which will prove to be fruitful. Efficient tracking of progress across hundreds of opportunities simultaneously required purpose-built software solutions.
Common Issues: It can be challenging establishing contact and extracting reliable and detailed information thus stalling or disrupting progress. Also having insufficient bandwidth and resource to consistently advance the project can result in failure and waste. Pursuing target opportunities in a linear fashion is likely to result in significant waste and disappointment.
Why Danescor?: Danescor’s specialist sector expertise, industry specific software and market intelligence increases accuracy and facilitates obtaining detail rich profiles for fast and accurate decision making. Covering all bases efficiently ensures success and avoids disappointment.
Narrow the field
- Reverse engineer IM
- Prioritise and establish relationships
- Identify target wants
- Complete detailed valuation analysis
- Agree on optimum deal structure
- Establish risk mitigation strategies
- Incorporate timeline management
Having established meaningful contact and gathered sufficient information, careful and insightful decision making is crucial in order to focus on the most value enhancing and convertible opportunities. Establishing the targets wants and red lines together with accurate risk identification and mitigation strategies is imperative achieving a successful transaction.
Building deeper relationships which provide the opportunity to verify synergy achievability together with confirmation of risk mitigation strategies is usually crucial to bridge valuation gaps and establish appropriate and acceptable deal structures.
Common Issues: Too much focus on the headline price rather than the overall value creation opportunity together with failure to incorporate the other party’s wishes often leads to friction and the failure to establish common ground. Also not appreciating the competitive landscape and operating in a vacuum is rarely a successful approach and runs the risk of being outbid.
Why Danescor?: Greater visibility on the buyer landscape and market intelligence enables better matched connections to be established quickly reducing buyer seller differences from the start. Danescor’s unmatched market insight into the M&A landscape provides invaluable intelligence to unlock deals.
- Establish walk away position
- Read deal landscape
- Establish negotiation strategy
- Build meaningful target relationships
- Identify time to close deal
- Agree HoTs and exclusivity
Once buyers have all the information necessary in order to complete a detailed valuation analysis and to make an informed decision, they need to establish the optimum structure and component details for the transaction. Making sure the potential vendor is in the right place and time to receive an offer is usually a judgement call but is often crucial in securing a deal.
It is vital any offer letter (Heads of Terms or Letter of Intent), includes enough detail and be in a form in which it can be accepted. There needs to be sufficient content to cover all meaningful commercial points but not so detailed or so vague as to require significant clarification, further negotiation or additional information. It needs to be acceptable and received at the optimum time.
Comment Issues: Failure for offer letters to adequately address vendors wishes or contain unnecessary complexity or be dependent on external uncontrollable factors usually makes them unacceptable. Failure to appreciate the competitive landscape or who has the decision-making power irrespective of the process being off or on-market can often prevent securing a deal or pre-empting a process.
Why Danescor?: More than a deal a week gets completed on the Danescor platform providing unrivalled market intelligence. The impartiality of our service offering enables us to establish better matches, negotiate agreements and bridge gaps to deliver superior closure rates. Delivering market accepted and established documentation provides comfort to both parties increasing completions.
Due diligence and legals
- Outline due diligence process
- Set up VDR and issue dd questionnaires
- Negotiate target net working capital & excess cash
- Project manage work streams and timelines
- Finalise any due diligence renegotiation
- Agree post closing integration plan
- Approve closing announcements
After agreeing terms and exclusivity it is preferable to establish a rigorous, comprehensive and realistic approach to due diligence and legal negation. For many off-market transactions and on-market transactions vendors are usually ill-equipped or ill-prepared to cope with the due diligence process. Making sure the data room is properly set up and fully populated before the buyer’s advisors are actively engaged is highly desirable for a smooth, efficient and frictionless process. Making sure parties agree to either a parallel or linear workstream process, along with task assignments and acceptable delivery dates with regular reviews will ensure a on-time harmonious completion.
Common Issues: Often when HOTs are signed, and exclusivity agreed vendors will start collating DD information but do not fully appreciate the extent or detail to which information needs to be provided. Usually, they are simultaneously trying to run a business while responding to what they perceive as a tsunami of information requests. This results in responses which either lack detail or are not shared in a structured form and thus elongating the process significantly and causing friction between buyer and seller.
Why Danescor?: Danescor’s proprietary VDR technology, its extensive transaction experience together with a thorough understanding of the buyers preferred process and requirements, can deliver huge efficiencies in a transaction. By assisting the vendor with VDR set up and population in sufficient detail before the acquirer’s advisers commence work costs can be reduced, timelines shortened, and harmonious relations maintained.
Market-leading M&A transaction application
Collaborative transaction application incorporating target identification and funnel management, campaign execution and project management, confidential messaging, real-time analytics and reporting, integrated virtual data room together with extensive knowledge & resource centre.
Market leading intelligence for fast, efficient target identification
Access proprietary real-time market information leveraging key data points across thousands of companies and transactions. Seamless project data integration incorporating dynamic market updates together with extensive access to Danescor’s Knowledge & Resource Centre.
Experienced M&A resource on-tap
Danescor’s Professional Services Team support corporates through acquisition projects providing end-to-end transaction services on specifically tailored task execution. Danescor’s professionals are hightly qualified and experienced providing invaluable insight and assistance throughout the transaction.