How to Choose the Best M&A Strategy Consultant: An Expert‘s Guide

Pursuing a merger, acquisition, or divestiture can profoundly reshape your business – when executed flawlessly. But with 70-90% of deals considered failures post-close, the risks are undoubtedly real.

Fortunately, partnering with an experienced M&A strategy consultant more than stacks the odds for triumph in your favor.

The Powerful Impact of M&A Consultant Guidance

Seeking external support during deals is rapidly becoming standard practice among savvy leadership teams. Why? With an expert consultant quarterbacking everything from target screening to post-merger integration, your chances of successfully landing, then optimizing, the perfect deal swell substantially.

Consider deals with consultants boast:

• 90%+ completion rates compared to <50% without advisory
• 71% shorter transaction duration – 9 months vs. nearly 3 years median independently
• 57% higher cost synergy achievement in the first year post-merger

Why such astounding separation in outcomes? Consultants drive deal success through:

Identifying prime targets

• Screen thousands of prospects against client goals and parameters for ideal fits
• Tap customized industry databases and connections to surface hidden gems
• Quantify cost and growth synergies for maximum modeling accuracy

Strategic deal optimization

• Structure deals for optimal tax efficiency
• Engineer creative payment terms to bridge valuation gaps
• Devise tactical competitive positioning to edge out rival bidders

Meticulous due diligence

• Thoroughly vet operations, finance, tax, legal, cultural components
• Uncover red flags through expansive partner network insights
• Calculate risk-adjusted ROI projections for decision support

Post-merger planning

• Proactively navigate executive leadership transitions
• Outline detailed integration roadmaps Well before close
• Model both organizations’ combined financial futures

So in summary– deals guided by qualified consultants structurally outperform their unassisted counterparts on nearly every dimension. Now let‘s examine how to identify and secure advisory aces of your own.

Clearly Define Your M&A Goals and Parameters

Whether a multi-billion dollar consolidation play or niche tech sector pickup, every deal starts by precisely framing the essentials:

• What are our objectives? Topline growth, new markets/products/tech?
• Who is our ideal target profile – and who doesn‘t fit? Public or private. Geographies.
• When must this happen by? What is our deal timeline?
• How much can we spend or stock can we offer? Our value limit.

Aligning on these core deal dimensions steers your entire consultant vetting process. Once crystal clear internally, provide specifics to any prospective consultants from the initial conversation.

Why early transparency around deal ambitions? By immediately conveying parameters like budget, timing considerations, target attributes, and so on, you filter for consultants who can delivery on your goals as opposed to generically “doing deals.”

You also test consultant responsiveness. A top caliber advisor will surface insightful questions, suggest constructive framework improvements while respecting your vision – no excuses.

Vetting consultants against your objectives also makes for honest conversations about realistic outcomes. Skilled advisors won’t overpromise, rather guide your aspirations with experienced wisdom. And isn’t that exactly the partnership you want?

Once your M&A guideposts are set, get ready to stack rank options. Let’s explore the make-or-break criteria that set apart good consultants from great.

Scrutinize Specialized Experience

Seasoned M&A consultants boast impressively vast deal experiences on paper. But for your initiative, only targeted expertise matters.

Start assessing advisor experience through three lenses – industry, deal type, and company size:

• Industry expertise – Have they handled technology mergers? Healthcare divestitures? Deep sector specialization converts directly into sharper diligence and truer valuations.

• Types of deals – Searching for a private equity target? Their pedigree closing take-private deals becomes vital. Public company carveouts? Ensure they’ve spun-off entities firsthand.

• Company scale – Evaluating small tuck-in acquisitions differs tremendously from multi-billion dollar buyside pursuits. Verify your advisor has structured deals specifically your size.

While no Consultant ticks every micro-vertical box, inspect their mix of niche competencies against your deal profile. Probe these dimensions through previous client examples and request data demonstrating successful outcomes.

Qualified advisors rise to education – not sales pressure. Engage sincere experts ready to guide your understanding vs. sell you on vague capabilities.

Target Identification and Diligence Rigor

Even once shortlisted by experience metrics, consultants vary wildly on how deals progress from first contact to signed merger agreements. Methodological differences become extremely influential to outcomes.

Carefully evaluate advisors on consistent execution across target identification, due diligence practices, negotiation strategies, and post-merger planning:

Target Identification

• What sourcing databases and screening tools do they use? Do they leverage custom industry searches or rely solely on intermediaries?
• Can they run both financial profile matches and “looks-like” searches if specific revenue or margin hurdles must be met?
• At what point in screening funnel do they involve your team? Will you get frequent target lists to co-evaluate options?

Due Diligence Processes

• During due diligence, do they staff diligence verticals (financial, operational, tax, legal) internally or outsource to partners?
• How frequently will they update on red flag discoveries, risk factor insights that may tank or de-risk deals?
• Will they produce comprehensive due diligence reports encompassing all surface areas – or leave certain topics solely for your team to double click into?

Post-Merger Methodology

• Do they advise around post-merger cultural blending, executive leadership decisions, retention tactics?
• Will they produce detailed 100-day or 1-year integration blueprints to orchestrate aligned change management?
• How will they model the newly combined entity’s financial profile inclusive of revenue synergies and cost savings?

An end-to-end methodology not only showcases consultant dedication but clarifies engagement expectations. Digging into these operational details also provokes discovery of advisors sweating the small (but important!) stuff versus winging the basics.

Verify Value Delivery Through Client References

Thus far advisors have quantified expertise against your criteria either through stats or descriptive assurances alone. Powerful consultants prove performance impact by having former clients eagerly validate them.

ALWAYS request 2-3 client references—ideally from deals closely mirroring yours in industry, size parameters or strategic goals. Speaking with an advisor’s past deals directly reveals:

• How well the consultant understood their sector, objectives and guided appropriately
• How responsive the advisor remained amidst unpredictable deal twists
• Whether the consultant delivered quantifiable value identifiable post-close

Probe referencing clients on specifics around:

• The consultant’s strategic insight quality – were they thought-partners or just extra hands on deck?
• How the deal outcome improved specifically by utilizing consulting services
• Cultural alignment and tone – did the consultant mesh well into the buying organization?

Third-party voices either reinforce or refute advisor credibility in real terms. Don’t underestimate this vital reference check during evaluations.

Gauge Communication Fit

Picture your consultant embedded alongside your team navigating tense deal moments – last-minute renegotiations, clashing executive egos, regulatory delays.

Now ask – do we collaborate smoothly when pressured?

Firming up communication & workstyle fit speeds deals. Start simple – does their preferred meeting cadence match yours? Do you detect transparency in how they approach issues?

Mismatched communication philosophies torpedo deals, so proactively investigate fit around:

Communication Style

• Cadence – do you both prefer agile, as-needed check-ins or rigid scheduled syncs?
• Tools – do you utilize the same platforms? Can you easily share documents?
• Transparency – do they freely offer pros & cons around decisions or hold back objectivity to avoid ruffling feathers?

Work Ethic & Personnel Management

• Work hours – do they match your team’s general schedule or have vastly different productive windows?
• Team oversight – how heavily do they manage subordinates? Does their delegation approach differ majorly from yours?
• Feedback culture – do they welcome critical advice and pivot quickly or seem set in their ways?

Chemistry can’t be forced but compatibility gets quickly exposed when deals intensify. Verify upfront your partnership feels like a productive, mutual rapport.

Compare Pricing Models & Hidden Fees

Consultant fees often feel shrouded in mystery. Packaged as “it depends” followed by a noncommittal hourly range, many firms evade transparency until formally engaged.

To accurately compare bids, get crystal clear on included services, fee structure and potential hidden costs among top contenders.

Fee Structures

Retainer + hourly and contingency (% of deal size) dominate pricing models, with hybrids blending both recently gaining favor. Compare fee implications by deal size and likelihood.

• Hourly functions better for smaller acquisitions with a defined scope and duration
• Contingency keeps consultant incentives aligned to an aggressive deal, but costs more packaged into your ultimate deal price
• Hybrid offers flexibility especially for extra complex deals

Total Cost Comparison

Stack rank consultants by tallying hourly fees + expenses + contingencies – with size and timeline estimates factored – to reach a total price tag. Does that feel commensurate to value proposed?

Hidden & Unexpected Fees

Ask pointed questions to tally the true total price:

• Do you provide target scanning or initial financial profiling for free? Or is all secondary research billable?
• How are travel expenses and data acquisition costs handled?
• What about final integration blueprinting or post-deal support once the ink dries?

Getting pricing transparency upfront avoids any budget bombs down the line. Now bound by clarity, seek counsel matching expertise to fees.

Optimize With a Custom Fit Consultant

While an exhaustive process itself, choosing the right M&A consultant proves foundational for deal success. Follow this guide’s datadriven steps to identify and vet advisors with care and intent until a true confidant emerges.

Signs of an ideal consultant match include:

✅ Niche industry and deal type expertise specifically aligning to your parameters

✅ Impressive deal outcomes secured for past clients

✅ Meticulous yet malleable methodology honed over years of experience

✅ Communication approaches and workstyles that sync fluidly with you from day one

Take your time getting the partnership just right – an invaluable M&A confidant will shape your deal destiny for years to follow. With aligned support tackling deals feels purposeful, even destined, versus haphazardly risky all alone.

Choose your trusted M&A guide wisely and deals shift from ambitious dream to lucrative reality. Now venture forth and manifest bold new visions confidently, ambitiously – and far from alone.