M&A Management Meeting: The Importance of In-Person Visits
After Buyer has reviewed the M&A book (or offering document) and submitted an indication of, the next step is to meet with Seller’s key management and/or ownership. The management meeting (run by Seller) provides a financial update (and any other pertinent updates) and allows a prospective Buyer to interact with Seller. It may even include a tour of the facility.
The management meetings effectively take the proceedings from black and white into Technicolor. A company described in a two-dimensional, black-and-white offering document suddenly becomes a living, breathing, three-dimensional entity when actual people meet face to face.
Also, meeting in person rather than on a conference call, for example, gives you the chance to read the body language of the folks on the other side. If you can’t see someone, you can’t observe body language.
Sellers shouldn’t take a meeting with a potential Buyer until the Buyer indicates its interest in writing. Even a Seller who wasn’t looking to sell and was contacted directly by a Buyer should refrain from meeting with the Buyer until the Buyer submits an indication of interest.
M&A Buyer interaction with key management
Not read about them, not talk to them on the phone, but meet face to face. Having a chance to engage in real-time interaction is far different from merely reading about people or processes.
The “coming alive” aspect of the meeting phase manifests in the ability of one side to ask impromptu questions of the other side. Instead of merely reading a black-and-white book, Buyer gets the chance to engage in a discussion when a question or comment pops up.
Both M&A sides perform due diligence
Yes, Buyer does the vast majority of due diligence, but during the meeting phase Seller gets a chance to learn more about Buyer.
This step is keenly important if Seller is planning to stay involved with the business after closing. And even Sellers who plan to sell 100 percent of the business and retire often have a parental view of their employees: They want their people to continue to prosper and succeed.
Sellers (or their intermediaries) observe prospective Buyers at the management meetings and attempt to gauge which group has the best chance of continuing the business’s success post-sale; who has the right skill sets to run the business; who has the ability to close a deal; and frankly, who they like.
Although that criterion is subjective, and in most cases a high valuation trumps all other considerations, but sometimes doing a deal comes down to the more visceral “We didn’t like them, let’s go with the other guys.”
Buyers should remember that Seller is speaking with other Buyers in most cases. As Buyer, don’t take it for granted that Seller will choose you. Put your best foot forward!
The M&A parties gauge chemistry
In other words, do Buyer and Seller play well together? Chemistry is another subjective concept. Both sides either like each other or have some sort of tension.
Keep in mind that the actions of one side or the other can affect how chemistry develops (or dies) at a meeting. It helps to be honest and upfront when working to develop chemistry.