M&A in a Tough Market: A Strategic Playbook for Startups and Scaleups for International Expansion - Part I - PREPARE

M&A in a Tough Market: A Strategic Playbook for Startups and Scaleups - Preparation

The funding landscape has shifted in recent months and years. With a more cautious investor environment, startups and scaleups looking to expand face a new and ongoing challenge: securing the capital needed for aggressive growth. But fear not, there's another path to consider: international mergers and acquisitions (M&A). We've seen a significant increase in inquiries about M&A from our network of founders, CEOs and investors.

Gernot Schwendtner, Founder of Upvisor Global: "In a tougher funding environment, international M&A can be a strategic alternative for ambitious companies. It allows you to access new markets, resources, and talent, all while potentially achieving a significant exit. We see more activity and requests for such options."

Here at Upvisor Global, we've helped numerous startups and their founders and CEOs navigate the M&A process with our first-hand experience and our extensive expert network. Several CEOs and founders we partner with have recently approached us seeking practical advice on M&A preparedness and execution. Here are some practical tips and tricks to consider - worth sharing:

1. Package the Opportunity & Catch Attention

• Focus on the Future: Don't just present your current state. Craft a compelling narrative about the combined potential of both companies. Create a catchy theme or project name that captures this vision.
• Visual Appeal: Make your presentation visually appealing, easy to understand and to share with a wider circle of stakeholders. This is crucial for buy-in from potential acquirers, their shareholders, and your own team.
• Synergy Showcase: Identify potential synergies (cost savings, new market access, product advantages) that can be achieved immediately, in the short-term, and long-term.

Have questions or want to connect with our international M&A and global expansion experts? Contact Gernot Schwendtner at [email protected]

2. Build Trust and Understanding - People First:

• People First: M&A is as much about people as it is about numbers. Focus on building rapport with the acquiring company's leadership. Understand their motivations, wins, and concerns. Do the same with investors or shareholders of the other party.

3. Define a Clear Process & Create Momentum

"Having a clear, well-defined process is essential. This includes outlining the steps involved, from signing a non-disclosure agreement (NDA) to due diligence and finalizing the agreement," says one expert. Work with a clear timeline from day one and understand how fast decisions can be made on the other parties side.

• Transparency is Key: Establish a clear, step-by-step process with potential acquirers. This fosters trust and keeps things moving smoothly. It also creates commitment and momentum.
• Identify Objections: Anticipate potential objections and plan your responses. Be prepared to address concerns about cultural fit, integration challenges, and valuation.

4. Leverage Alternatives - Options are Vital:

• Play the Field: Don't limit yourself to one potential acquirer. Talk to several companies to build leverage and gather competitive offers. Having options is vital.
• Show Your Independence: Develop a strong standalone financial model highlighting your future growth potential. This strengthens your negotiation position and shows that you are prepared to go your own growth path.

As a founder and CEO, securing the right sparring partner for M&A negotiations is an investment that yields significant returns.

5. Prepare for Success - Work With the Right Experts:

• Teamwork Makes the Dream Work: Assemble a team with the skill sets needed to navigate the M&A process. This may include advisors, lawyers, and experienced team members. Having the right sparring partner as founder and CEO on board will pay off nicely.
• Cultural Fit Matters: Assess the cultural alignment between your company and the potential acquirer. Shared values are critical for a smooth integration.
• Data Room Ready: Have a virtual data room prepared with all relevant documents to expedite due diligence.

6. Embrace the Journey:

• Momentum Matters: Understand the timeline of the potential acquirer and keep the process moving swiftly once it gains momentum.
• Valuation Wisdom: Let the acquirer make the first valuation offer based on the data you provide. The initial number might surprise you positively.
• Contingency Plans: Anticipate potential challenges and develop strategies to mitigate them. Have a contingency plan in place for unforeseen circumstances.

Gernot Schwendtner: "International M&A is a complex but rewarding process. With careful planning and a strategic approach, it can be a powerful tool for startups and scaleups to achieve their long-term goals."

Remember, M&A is a marathon, not a sprint. Be patient, persistent, and well-prepared. With the right strategy, you can leverage international M&A to propel your company to new heights, even in a challenging funding environment.

Have questions or want to connect with our international M&A and global expansion experts? Contact Gernot Schwendtner at [email protected]