Logisyn’s Managing Director, Mark Para, was honored to be a panelist at IFG's US event in Chicago alongside Mayur Bawa and Kent Hansen! This panel discussed the nuances of M&A in an uncertain economic climate, highlighting the importance of due diligence, valuation strategies, and effective integration processes to maximize deal success.

Key Takeaways:

M&A in Uncertain Economic Climate • The current economic climate presents some challenges, with sellers in the lower middle market maintaining reasonable expectations, backed by a balanced mix of debt and equity financing. Although public company transactions are holding steady, there’s been a noticeable decline in overall deal flow and valuations due to reduced demand. Because of this, private equity is likely to take a more cautious approach.

Importance of Due Diligence • Thorough due diligence is critical. This includes conducting cultural and financial audits, as well as owner background checks. Addressing legal and regulatory issues, particularly in international deals, is essential, along with personal meetings to assess company culture. Trusting instincts are vital, as red flags often emerge in discussions that financial concerns should not overshadow.

Valuation Strategies • Accurate valuations depend on a variety of strategies. Adjusting EBITDA for one-time and owner-related expenses is key, as is evaluating the quality of earnings (QOE). Additionally, accounting for non-operating costs helps uncover the true EBITDA. It’s also vital to assess a company’s structural defensibility and understand risk factors, as these elements play a significant role in determining valuation multiples.

Effective Integration Processes • Successful integration after an acquisition is critical for long-term growth. Early planning and clear organizational alignment are essential to set the stage for success. Integration strategies should be customized based on whether the acquired company will be fully integrated or remain standalone, with some cases benefiting from minimal integration. Ensuring that sales teams are aligned and motivated is crucial for driving revenue effectively after the acquisition.