The Cornerstone of a Successful Deal
In the world of mergers and acquisitions (M&A), trust is not simply a buzzword—it's the bedrock upon which successful transactions are built. Facilitating trust between all parties is one of the primary roles of an intermediary, and the early establishment of trust is a crucial component of successfully navigating the complex, and often sensitive, process.
In this clip from Office Hours, the Founders of MAHA discuss the key role of trust in a transaction and elaborate on a circumstance where the absence of trust led to a failed outcome.
Keys to Facilitating Trust in M&A
Proactive Communication
In the simplest terms, trust is established through proactive communication between both parties. Consistently ensuring that everyone involved is aligned as it pertains to deliverables, transaction milestones, and contractual terms should be the direct responsibility of an intermediary. The less obscurity, and therefore the less opportunities for misinterpretation on either side, the better. It is especially important to address additional data requests promptly, as a means to avoid any unnecessary delays or prohibit either side in their preliminary assessments.
Understanding and Flexibility
It is important to understand the differing motivations on either side of a transaction. While both buyers and sellers have a mutual goal of reaching a successful outcome, the rationale behind how and why each side is approaching the transaction will likely differ. Having experienced deal support that can assist in interpreting the other side’s statements, deliverables, and actions, will assist in fostering an environment of flexibility, where everyone is working toward a unified outcome. At times, it can feel as if the parties are working in opposition. But maintaining the presence of a third party that can assist in bringing both sides together week after week, ensuring everyone is maintaining and truly working toward the agreed upon terms set in place within the Letter of Intent (LOI), is vital.
A Banker’s Role
While there are definitive responsibilities an intermediary or Banker should provide in a transaction, one that is often overlooked is the role of fostering and facilitating trust between everyone involved. Establishing trust begins as early as the reception of the Confidential Information Memorandum by an interested buyer. An intermediary should assist in ensuring that all the information provided on a business opportunity is accurate and reliable. An intermediary will then progress to facilitating conversations, additional requests, and a subsequent diligence process based on the information provided in that initial CIM.
If there is no foundation of trust in which buyer and seller can collaborate and communicate in a due diligence process, a transaction will be difficult to complete.
Conclusion: The Path Forward
Trust is the glue that holds transactions together. It requires active efforts from all parties involved—buyers, sellers, and advisors. By maintaining open communication, demonstrating flexibility, and seeking to maintain clear and active milestones, we can ensure higher rates of successful transactions.
If you found this discussion insightful, we encourage you to watch the full video interview where we delve deeper into the nuances of trust in M&A healthcare transactions. Understanding these dynamics can make all the difference in your next deal. For expert guidance and the trust you need for a successful M&A transaction, contact M&A Advisors today.
This material has been prepared for information and educational purposes only, and it is not intended to provide, nor should it be relied on for tax, legal, or investment advice. You should consult with your own tax, legal, and financial professionals for your specific situation.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or opinions of Finalis Securities, LLC. Securities offered through Finalis Securities LLC Member FINRA/SIPC. M&A Healthcare Advisors and Finalis Securities LLC are separate, unaffiliated entities.