Episode description
In this podcast Chris Vollmond-Carstens, NTIVA's Chief M&A officer, discusses with us Reverse Due Diligence, i.e. questions that sellers should be asking buyers.
Chris and Ntiva have been incredibly active in the MSP M&A landscape. Since 2015, Ntiva has successfully completed 15 transactions, with their most recent one being the acquisition of the Purple Guys.
Key questions cover the following topics
Cultural Fit and Values
- Questions to ask:
- What is the cultural fit between our organizations?
- How do you plan to integrate our employees?
- What opportunities for growth and development will be available for our team?
Business Vision and Strategy
- Questions to ask:
- What is your long-term vision for the combined business?
- How do you plan to grow and expand our business post-acquisition?
- What strategies do you have for enhancing our current offerings and capabilities?
Client and Service Management
- Questions to ask:
- How will the acquisition affect our existing clients?
- What enhancements or changes can our clients expect in terms of services and support?
- How do you plan to manage client relationships during and after the transition?
Financial and Deal Structure
- Questions to ask:
- What is the proposed financial structure of the deal (cash, rollover equity, earnouts)?
- How do you value our business, and what are the key valuation drivers?
- What are the potential financial benefits and risks associated with the proposed deal structure?
- What portion of the consideration will be in the form of rollover equity?
- How is the rollover equity structured, and what are the terms?
- What are the historical performance and future prospects of the buyer’s business?
- How are earnout targets defined, and what metrics are used?
- What is the timeframe for achieving earnout targets?
- What are the potential impacts of earnouts on business operations and integration?
Post-Sale Career Paths and Opportunities
- Questions to ask:
- What options are available for founders and key employees post-sale?
- Can we choose different career paths within your organization?
- What support will you provide for transitioning into new roles or responsibilities?
Synergies and Value Creation
- Questions to ask:
- What synergies do you anticipate from the acquisition?
- How do you plan to achieve cost savings, revenue enhancements, and operational efficiencies?
- How will we benefit from these synergies, and what incentives are in place?
Integration Plan and Timeline
- Questions to ask:
- What is your integration plan for merging our businesses?
- What is the timeline for key integration milestones and activities?
- How will you ensure a smooth transition for our employees and clients?
Conclusion
Thorough due diligence and asking the right questions are crucial for MSP sellers considering an M&A transaction. By seeking advice from experienced professionals and ensuring alignment with their goals and values, sellers can achieve a successful and mutually beneficial outcome.