Mergers & Acquisitions: Have transparent, upfront conversations

Q. What steps should I be taking to most effectively position my company to go through an M&A process? 

A. Foremost, ensuring organizational alignment before approaching the market is paramount in setting yourself up for a successful process. It’s critical to achieve stakeholder agreement in terms of transaction goals, deal structure (e.g., majority vs. minority investment, strategic vs. private equity partner), timeline and valuation expectations to minimize the likelihood of internal disagreements throughout the process. Engaging in transparent, upfront conversations with shareholders and management on these points before launching a process helps create trust and alignment, which is imperative in a transaction process.  

Management should also begin preparing for the level of scrutiny that potential partners will place in their evaluations of a company’s financial and operational processes. Addressing key diligence points before going to market provides investors with the information needed to effectively complete their due diligence work, while mitigating the risk of any unforeseen hurdles that may arise. 

To help accomplish the above, engaging experienced legal and financial advisers who specialize in M&A advisory is a critical step. Having a team of experts at your disposal is invaluable in negotiating the most attractive deal terms with the right partner, ensuring an efficient process with a high certainty of closing, and educating shareholders throughout the process. Partnering with advisers with aligned incentives (i.e., maximizing valuation, ensuring an efficient process, finding a partner with cultural and philosophical alignment, etc.) provides added comfort that your best interests are being kept at the forefront.  

Kevin Palamara is managing director at Provident Healthcare Partners. Reach him at kpalamara@providenthp.com.