The Role of Corporate Finance in the (Deeptech) Deal
One of the reasons for the failure of M&A deals is the excessive enthusiasm of those involved in the transaction process and the lack of experience of business shareholders.
To ensure that the financial and organizational targets of the deal participants do not remain dreams but become reality, it is necessary to “calculate” them and outline a clear plan of action. These tasks are performed by a financial advisor, in general better known as the corporate finance company. Whereas selling a family business or small scale “regular” enterprise can be done by a single financial advisor (“the spider in the web”), for most Deeptech companies this is no longer a feasible configuration. The set of responsibilities as well as the tasks to be specified and executed have a level of complexity and, more importantly, a breadth and depth that makes it virtually impossible to be done by a single person. A deep understanding of the value proposition of the company, the ability to build a detailed acquisition memorandum and build the proper long- and short lists of potential acquirers is an absolute must for a successful M&A project. In addition, a solid valuation must be built to not only provide a foundation for any negotiations, but also to establish a proper mandate for the shareholders of the company. It is also important that the company can continue its own work and is not loaded with producing vast amount of materials required to build the acquisition dossier.
It is therefore wise to look at corporate finance companies which have the proper experience, not just in the deal making itself, but also in the specific market the Deeptech company operates in. Understanding the market, the company and the ecosystem is the foundation to a successful deal.