May 28, 2019
By Louis Diamond

Many independent firms reach the point in their business lifecycles where they can no longer sufficiently grow or compete on their own. When the discussions around finding a way to gain scale and solve for succession hit a wall, firms often start to consider a merger or acquisition opportunity. But finding the right M&A partner isn’t all that easy.

As a firm that represents both buyers and sellers, it’s our job at Diamond Consultants to keep a finger on the pulse of the market and listen to many different value propositions from prospective buyers. That said, only a handful of firms are truly poised to be meaningful acquirers in this hyper-competitive marketplace. Attributes such as being well capitalized (given that most sellers expect a decent portion of the purchase price at closing), having a repeatable and battle-tested M&A process, and boasting a unique value proposition and strong leadership are now almost table stakes in this environment.

The truth of the matter is that buyers and sellers often fail to recognize what a marriage between firms can mean for ongoing control, growth and quality of life. It is paramount that firm owners are strategic in how they present their value to prospective sellers — and sellers need to come to the table prepared with realistic expectations for the new affiliation.

One key area that many buyers lose sight of – which helps to focus targeting, due diligence efforts and proper alignment – is being clear and honest about what type of ‘acquirer profile’ your firm presents to a prospective seller. It’s equally important to recognize that remaining consistent in this regard is critical. That is, once a firm’s persona is established, any variances can lead an organization astray of its core competencies and culture, ultimately suppressing enterprise value.

We find that most acquirers have traits that fit within one of the following four categories – each of which offers a unique value to sellers. Read more to see the four acquirer profiles.