2013 M&A Operations Review

January 2, 2014

As our team interacts with M&A firms around the globe we see many interesting operational trends in the industry. So often we and other research firms like to reference the state of M&A in deal count, aggregate transaction value, etc. While these metrics are useful, they are representative of closed deals, not of the methods in which they were closed, or the firms that closed them.

The trend towards lean M&A is in full swing. Make no mistake, the most profitable and productive middle market M&A firms are using all the resources available to them out of house to have the capacity and sophistication of a larger firm without any of the fixed cost. I have been preaching this for years, but now more than ever the industry seems to agree with me.

Middle market M&A firms can utilize on-demand resources including firms like CapTarget on the research front and a number of great virtual data rooms, cloud storage, virtual assistant and remote collaboration tools all designed to lower costs and leverage technology.

The middle market M&A firms with huge offices, fixed tooling costs and multiple heads on the payroll are now at a disadvantage over those who are leveraging their time and money in a more efficient and effective manner.

I remember when M&A firms were filled with paper. Here at CapTarget we have a completely paperless work environment. I remember when the best firms were those with the biggest teams. Now some of the best middle market shops are manned by 1 and 2 person teams, closing as many deals as the once dominant larger firms.

If you are a middle market investment banker or advisor looking to make your mark on your region in 2014 you will need to modernize your approach. If you do not, someone else will, and you will be left in the dust. I personally meet many bankers who are holding onto the old model of M&A operations with a death grip – I can guarantee you this will be a big factor in their eventual demise.

As we enter 2014 I encourage anyone in the space chasing a deal to work smarter, leaner and to be open to all the great new tools and strategies that are now available. As a litmus test, ask yourself “Am I doing business the same way I was 5-10 years ago?” If the answer is “Yes,” it is time to consider making a change.