Mergers and acquisitions activity remains strong across industries. Many M&A opportunities stem from a combination of strategic repositioning and succession planning. Whether exploring current M&A activity as a buyer or a seller, working closely with a trusted team of professional partners as early as possible helps mitigate risk and ensure agreements will honor an overall vision for a company’s future.
Consider these best practices when preparing to acquire or sell a business:
Evaluate and Align Organizational Leadership
The long-term success of a merger depends on how effectively two organizations come together, making cultural and operational compatibility an early priority.
Workflows, values and strategic goals should complement one another rather than compete. Leadership quality also plays a critical role. Reviewing the track record of key executives, including their experience, results and reputation, can offer insight into how well the organization will navigate post-merger integration.
When leadership teams share a consistent vision, execution follows. When visions diverge, even well-structured deals can unravel. In many cases, people matter more than products. Leadership alignment and trust can outweigh service offerings, highlighting the value of background and reference checks on senior managers who will shape the organization moving forward.
To avoid costly misalignments surfacing after merging is complete, leaders should examine any differences in approach early in agreement discussions.
Assemble Advisors and Evaluate Legal Protections
A well-rounded advisory team provides essential guidance throughout M&A processes. Engaging a banker, attorney and accountant ensures that financial, legal and operational perspectives remain in focus from the outset.
Advisors who understand the company’s long-term objectives for both the business and its employees help keep decisions aligned with those goals. Legal counsel plays a particularly important role in safeguarding interests by addressing contract terms, deal structure and regulatory obligations, reducing future disputes. Bankers and accountants bring clarity to valuation, financing and financial positioning, helping ensure representation and transparency at every stage.
Design the Deal and Optimize Financing
Thoughtful deal structuring can expand buyer interest while balancing risk between parties.
Seller notes and earnout agreements are commonly used tools, among many, to help bridge valuation and financing gaps. Seller notes, for example, can address limited upfront capital by offering flexible repayment terms with interest. Earnout agreements provide another option by tying a portion of the purchase price to future performance and incentivizing continued growth.
Because no two deals are alike, financing strategies should be tailored to the specific circumstances, whether through a mix of cash, notes, earnouts or other performance-based components. In some cases, setting aside a modest equity pool for key managers can further strengthen continuity, particularly when leadership is critical to operations and commercial relationships.
Used together or independently, tailored structures can make transactions more attractive and better aligned.
Steps While Considering M&A
The following actions provide a practical framework to help organizations manage risk, confirm strategic fit and prepare for a successful transaction:
- Engage an experienced M&A bank, banker, attorney and accountant. Complete the financial review checklist.
- Ensure the merger is a proper fit for the organization and management.
- Conduct thorough due diligence on taxes.
- Consider including a seller note or earnout in the pricing structure.
- Depending on the business risk, escrows or Reps & Warranties insurance may apply.
- Consult with the board of advisors. If selling a company, seek financial institutions and investors that have expertise in the relevant industry or niche business.
Factors That Continue to Shape M&A Strategy
- Supply Chain: Diversifying to adapt to market changes
- Technology: Capability-driven M&A, focused on bringing in-house expertise
- Corporate Responsibility: An expectation increasingly influencing boards and investors
- Expansion: Increased competition, which leads to expansion into new markets, diversification of products and need for broader financial capabilities
- Succession Planning: Exploring ESOPs and other options to maintain culture and enhance employee involvement
Bank on Expertise
While many M&A conversations focus on price and structure, success for companies and employees comes from what happens after the deal closes. The right professional partners can significantly influence the outcome of a merger by helping leaders think through strategy, culture and how the business actually operates to ensure the benefits of the transaction are realized long term.
Not all banks, law firms and accountancies specialize in mergers and acquisitions or strategies for succession planning, so it’s important to work with a team bringing proven experience navigating complex deals. This includes looking beyond advisory support during the initial transaction to confirm that a bank offers financing expertise and the ability to execute cash flow-based lending when needed. Banks with dedicated sponsor finance teams add further value, particularly in private equity-backed transactions, by delivering tailored funding solutions aligned with deal objectives.
A banking partner that looks beyond a single transaction can help support ongoing growth, future acquisitions and evolving capital needs that build on the opportunities and professional partnerships initially established through the M&A process.
Brian Crisp is regional president at Enterprise Bank & Trust. With more than 20 years of banking experience and close ties to the Arizona business community, he oversees all aspects of the bank’s operations in the state, as well as the Albuquerque market, and facilitates the bank’s growth in the region to meet existing and prospective clients’ expanding needs.
