Consulting Magazine hosted the latest in its Balance Sheet Best Practice webinar series, Managing Growth for Maximum Profitability, and Simplus EVP of Business Development and Strategy Lance Evanson was a key speaker! The webinar also included insights and Q&A sessions with Elliot Fuhr of Berkley Research Group; Thomas Rodenhauser of ALM Intelligence; and Lauren Leonard of Kimble, the webinar’s sponsor. The webinar was led by Joseph Kornik, Editor in Chief of Consulting.
As the fastest growing consulting firm ranked by Consulting magazine, Simplus was honored to be featured in this webinar and represented by Evanson. We highlighted three key takeaways from the advice and leadership Evanson offered during the webinar for firms looking to maximize their growth safely by building value through M&A. Take a look at how Simplus manages its growth!
Clarity of your vision
Before beginning to pursure M&A, it’s crucial to have clarity and unity revolving the vision for M&A. If your organization is ready to pursue M&A, the first step is to establish clarity. “What is your end goal? That answer must be very clear,” said Evanson. “And at Simplus, simplicity is our focus.”
With that focus in place and always present, Simplus has been able to navigate M&A successfully and continue growing securely. It’s also important to have clarity surrounding the right customer for acquisition targeting. Evanson shared some possible end goals and factors that may make up the right customer for other organizations seeking to establish their M&A vision:
- Company size
- Liquidity event
- Corporate mission
- Ranking in the industry
- Average deal size
- Customer type
- Service type
- Product focus
It was by understanding both our end goal and ideal customer type that Simplus was able to identify and acquire the latest addition to our team, Sqware Peg—a great match for Simplus’ goal to simplify and provide stellar service on Salesforce products.
The M&A process and benefits
Evanson next addressed specific steps involved in the M&A process, and benefits reaped from following it. The M&A process involves financing, identification, validation, negotiation, and closing—in that order. Evanson addressed the fact that financing is, perhaps surprisingly, at the very start. “Financing is at the start not because we’re raising money then,” said Evanson. “But it’s asking can we get the money that we need to afford these companies. It’s understanding the reason for raising money.”
Once you identify that reason, you can then move onto identification (what are your targets, specifically?) and validation. It’s important to spend quality time on the validation stage, which entails confirming if the target is the right fit culturally, financially, and with their product focus, before diving into the negotiation and closing stages.
Evanson showed how M&A, when done right, can have positive impacts on gross margin, company valuation, and gross revenue. M&A founded on a clear vision leads to increased efficiency in delivering company offerings, multiple arbitrage from acquired companies, and new revenue from existing customers.
Seeing the value in an integration strategy
“70 to 90 percent of M&A attempts are failures,” said Evanson. He then explained how this is due to organizations that suffer from inadequate due diligence, a false sense of security, a lack of understanding of actual value, and not enough involvement from management.
However, organizations that make concerted efforts to involve all necessary leaders, create clear expectations for the M&A strategy, and take time to recognize and evaluate cultural synergies or differences between your organization and the target, these are the organizations that enjoy wild success from M&A coupling their organic growth.
Huge thanks to Consulting magazine for the repeated recognition; our partners and colleagues that help us in investing, funding, and acquiring; our customers for their continued loyalty; and, most of all, our team members—the real source of our growth and fuel to keep doing what we do best: make complex things simple.