M&A Advisory / Strategic Readiness / Corporate Strategy


Gross Margin (GM) is often viewed as a simple/quick way to ascertain a company’s profitability. Our view is that it in its common form ( x% ), it is largely meaningless - but viewed through the right lens, it is an extremely useful measure.
When it comes to selling a small business (which we define here as less than $30M/yr in Revenues), there is often a temptation to go-it-alone, rather than engage M&A advisors. It may be that the confidence, intelligence and aptitude that were valuable in growing the business are assumed to apply to the sale of the business, or it may be that the expense of Advisors fees is considered to be “too much”, but for one reason or another many small owners at this size feel they can sell their business themselves
The decision to seek a strategic Buyer for a company that you’ve founded or that you lead on behalf of shareholders represents a critical inflection point in the lifecycle of a business. As part of the comprehensive series Navigating Sell-Side M&A we explore various elements that comprise a successful M&A outcome for small- to medium- sized businesses, beginning with the first in the series:
The world of digital marketing has reached a critical decision point. For years, digital agencies have espoused their data-driven / innovative / tech-savvy credentials, while behind the curtain the work is done by people. An agencies’ DNA is that of a services business with every strategic plan, compensation model and sales channel geared toward services – thus they have little incentive to become efficient if it means reducing services revenues.
We often see smaller businesses receiving weekly outreach from interested buyers. This Buyer interest tends to come from financial, rather than strategic, buyers and is driven by “getting a bargain from an unsophisticated seller” – and interest quickly fades when the likelihood of a bargain disappears. In Myth #1, we introduced information asymmetry, and it’s most visible in these “interested Buyer” calls.
The reality is you could probably do a lot of things that you’re not qualified to do (e.g., represent yourself in a legal case, change your oil, or something that seems more straightforward such as rewiring your home). In the end, the savings don’t outweigh the risks, which is why we hire experts with the knowledge, experience and tools to address specific requirements. So, in the end, you could certainly take on M&A, but at what risk and ultimately at what cost?
Far too many acquisitions across industries, geographies and sizes fail to meet their post-acquisition targets. According to a commonly cited Harvard Business Review metric, 70-90% of acquisitions fail, in part, as a result of poor integration execution. We often hear of a high-priced acquisition within the Digital Marketing, Analytics, Content or Media sectors struggling and then being unceremoniously absorbed into the parent company.
Before the lockdowns of the previous two years, we operated in a market for people’s time where their physical presence was usually required in expensive cities and/or difficult-to-reach places. Career roles were largely limited to the people who could be physically present and they paid local-equilibrium wages. The lockdowns were a shock to this balance in two vital ways
For all intents and purposes, the last decade has provided a remarkably strong and accommodating business environment for most marketing and digital agencies, especially for those that were newly formed in the period. Even COVID proved a “boon” for many companies whose clients required a rapid acceleration of their digital transformation initiatives.
In this Part II, we discuss 5 Building for Culture tenets that change the way business is conducted and they are Focus on the Doable, Know your Future, Be Resilient, Change the Mechanics of Building and Managing a Bench and Build a “Yes and…” Culture
There is no getting around the fact that it takes a lot of effort to close an acquisition at attractive terms. Even when a good offer appears unsolicited, there is still an incredible amount of work required to get the deal closed, especially while avoiding a price dilution along the way.