In the complex world of small and medium-sized enterprises (SMEs), mergers and acquisitions (M&A) represent a crucial challenge that can determine the success or failure of a company. Whether acquiring or selling, SMEs rarely have an in-house team of M&A experts. Therefore, it is essential to adopt the right approach to manage the evaluation and negotiation process effectively.

Typically, small business owners can choose from three main approaches: the DIY approach, relying on professionals not specialized in M&A, or collaborating with dedicated consulting advisor. Let’s examine each approach.

DIY approach

The first approach is the DIY method, where the owners or managers handle all stages of the M&A process themselves, from valuation to negotiation and finalizing the deal.

Advantages:

• Cost savings: managing the process internally eliminates the need to hire external experts, leading to initial financial saving.

Disadvantages:

• Lack of experience: without a deep understanding of M&A dynamics, mistakes can easily occur, potentially costing dearly.
• Time and resources: the process can be extremely time-consuming, diverting attention from daily operations.

At Winnerge, we have often encountered companies using this method without achieving significant results. They frequently struggle to conduct a business valuation that aligns with market standards and to navigate the subsequent negotiation phases successfully.

Long-term professional partners

The second approach involves seeking assistance from external professionals, such as accountants or lawyers, who have been long-term collaborators with the company and can provide legal and financial support, though they may lack specific expertise in M&A operations.

Advantages:

• Familiarity with the business: if they have already worked with the company, they may have a deeper understanding of its specifics.

Disadvantages:

• Limited M&A experience: their M&A experience may be limited compared to dedicated specialists because it is an occasional activity.
• Less structured approach: they may lack specific processes and tools for managing M&A operations.

For this second approach, our team often collaborates with accountants and lawyers who, knowing the client company well, decide to involve us in managing the M&A operation with specific expertise.

Collaborating with a dedicated consulting advisor

The third approach is to rely on a consulting advisor specializing in M&A. These advisor offer comprehensive support, from company valuation to negotiation and deal finalization.

Advantages:

• Experience and expertise: M&A consulting advisor have extensive experience and specific knowledge in the field.
• Dedicated resources: they have the tools, processes, and resources needed to manage M&A operations effectively.
• Network and contacts: they may have access to a network of potential buyers or sellers.

Disadvantages:

• Cost: the services of an M&A consulting firm can be costly, but they are often offset by a proper valuation of the company.

The Winnerge team stands out from other M&A consulting firms by focusing exclusively on SMEs, offering a real and professional interlocutor who listens to the client’s specific needs instead of just providing numbers and standardized processes. Our effective and personalized method makes our services economically accessible even for medium-small businesses.

Summary

For SMEs, choosing the right approach to M&A operations depends on several factors, including available resources, internal experience, and the complexity of the transaction. Both sellers and buyers can benefit from the expertise of an M&A consulting advisor to maximize the value of their operations and ensure a smooth transition.

No matter which approach is chosen, it is crucial to clearly understand your needs and goals and to carefully balance the pros and cons of each option. Partnering with M&A advisor experts can be the key factor between a successful transaction and a failed one.