What Is M&A Consulting?

M&A stands for Mergers and Acquisitions, which basically means helping companies with buying, selling, or merging with other businesses. It’s a broad field that covers all sorts of exciting things – from company takeovers (using debt or equity) to mergers, spin-offs, carve-outs, and strategic partnerships.

We break it all down: what the main goals and tasks are in M&A, how to make the most out of your deal, and what the typical process looks like. Plus, we explain the key services consultants usually provide in this space.

Intro to M&A Consulting

M&A consultants assist companies in all strategic and operational steps related to a potential change in ownership or business structure. This can include activities such as acquisitions, mergers, spin-offs, or divestitures.

Depending on the firm, there can be different focuses. For instance, Bain often works closely with private equity funds, while the Big 4 (like PwC, Deloitte, EY, and KPMG) have their own transaction advisory teams. Additionally, there are specialized M&A boutiques that concentrate exclusively on these types of deals.

The goal of M&A consulting is to provide comprehensive strategic portfolio management, ensuring profitability and growth in the long term. Consultants work on complex tasks like:

• designing detailed spin-off or divestiture plans,
• evaluating potential target companies,
• identifying synergies that could arise from an M&A deal,
• calculating the purchase price (also known as the purchase slide),
• and guiding the company through the entire process, including post-merger integration.

Consultants can also play a vital role on the sell side. They help identify buyers or investors, often as part of an exit strategy for business owners or investment funds. Their work ensures that the transaction is fair and smooth for everyone involved.

What Makes M&A Deals Successful?

Successful M&A deals require a mix of both knowledge and experience. Consultants don’t just focus on the numbers—they help clients understand the bigger picture and connect with key players in the industry, such as global investors and potential acquisition targets, to maximize the deal's value.

This is especially crucial when dealing with complex situations, like joint ventures, or when there’s high urgency, like fire sales, where everything needs to move fast and confidentially.

A critical factor in the success of an M&A deal is the diverse expertise needed from various fields. It’s not uncommon for a single transaction to involve consultants, investment bankers, and legal experts—each providing their knowledge in areas like business strategy, tax, commercial law, and finance.

Finally, a smooth M&A deal requires strong mediation between the buyer and seller. M&A consultants often add value in negotiations, helping their clients frame the right arguments and focus on what really matters during the discussions. After all, a company doesn’t just buy or sell itself!

M&A Process and Roles of Consultants

M&A consultants play a crucial role in almost every M&A transaction. Their tasks cover several key steps that are essential to ensuring the success of the deal. The main areas of focus include:

1. M&A Strategy: The first step is to assess strategic opportunities, with M&A often being considered as part of a company’s growth or exit strategy. Consultants help determine the best approach based on the current market environment and the company’s individual situation. An M&A opportunity is only pursued if it offers financial, operational, and strategic benefits while also weighing the risks involved in the deal.
2. Market Analysis and Partner Selection: Once M&A is chosen as the strategy, the next phase is market screening. Consultants dive into public and private databases to identify the best investors, buyers, or sellers that align with the company’s goals. After pinpointing potential partners, they conduct a deeper analysis of their business models and market positions to uncover potential synergies that could be realized through the transaction. Meetings with interested parties are only arranged for those who have signed a non-disclosure agreement (NDA).
3. Due Diligence and Negotiations: This is when the core M&A process begins. A major aspect for consultants is due diligence, which involves a thorough examination of the business. This may include various types of due diligence, such as legal, financial, or commercial checks. The goal is to uncover any risks or potential issues and assist in determining the valuation of the company. Consultants also play a crucial role during the negotiations, helping to ensure a smooth and efficient deal closure.
4. Post-Merger Integration (PMI): After the deal is successfully completed, the post-merger integration process begins. Bringing two companies together is often as complex as a surgical procedure. Different operating models and cultures must be harmonized. The goal of PMI is to bridge these gaps, realize the synergies identified during the due diligence phase, and maximize the value of the deal for the buyer. Consultants guide this process to ensure everything runs efficiently and the integration is successful.

Throughout the M&A transaction, consultants are essential for finding investors and partners, guiding the negotiation process, and maintaining confidentiality to ensure a smooth transaction. With their expertise, they help ensure that the process goes smoothly and minimize the risk of failure. This is why more and more companies rely on M&A consultants to help them achieve a successful deal.

Core M&A Consulting Services

As previously mentioned, M&A consultants are involved at every stage of the M&A process. They support various aspects such as carve-outs, target company searches, company valuations, capital structure optimization, identification of refinancing opportunities, and stakeholder management. These services can be broken down into specific areas that consulting firms typically offer:

M&A Strategy:

Consultants help assess M&A as a strategy to achieve long-term goals. This includes identifying the most valuable sectors and functions for the business, as well as examining its value chain and underlying economics.

Valuation:

Determining the final valuation range is done by using different methods, such as discounted cash flow (DCF), and comparing the company with publicly traded peers or similar transactions using metrics like sales or EBITDA multiples.

Financial and Debt Advisory:

Consultants evaluate a company’s ability to manage its debt, including liquidity assessments and optimizing the capital structure. This may involve identifying refinancing opportunities from alternative sources to reduce capital costs.

Company Sale (Including Vendor Due Diligence):

When preparing for a sale, consultants analyze the company’s situation, select and assess potential bidders, craft a compelling equity story, and guide the negotiation of both indicative and binding offers.

Company Acquisition (Including Financial, Legal, and Commercial Due Diligence):

Consultants define the requirements for target companies and the acquisition process. This includes helping with the search for suitable targets, performing due diligence, and providing support during the negotiation and M&A closure.

Distressed M&A:

For distressed assets, consultants use restructuring strategies to develop a turnaround business case. This often involves negotiating with creditors to restructure debt, followed by a fire sale to an external investor or strategic buyer.

Post-Merger Integration (PMI):

After a deal is completed, operational support is crucial. Consultants address key success factors, such as aligning management teams, resolving cultural conflicts, preventing process slowdowns, and ensuring customer and business continuity. This process also includes planning and managing integration activities, capturing value, and managing operating model and cultural changes.

Other M&A Consulting Services

M&A consultants are often involved in more complex projects with demanding requirements for their clients. These projects include IPOs, separations, joint ventures, and alliances.

First, IPOs require strong preparation from the company wanting to go public. M&A consultants support companies going public in several ways:

• Strategy development: Developing and communicating a compelling strategy to maximize value.
• Market strategies: Creating strategies for public markets and determining the optimal timing and structure for the IPO.
• Market entry preparation: Preparing for entry into financial markets, including IPO project management, business plans, valuations, financing strategies, listing documents, and analyst presentations.
• Long-term success: Building the capabilities necessary for long-term success in capital markets.

Second, separations are often needed due to regulatory or strategic reasons. Divestitures, or selling parts of the business, can be complex and similar to M&A and integration processes. M&A consultants manage these efficiently by assisting with:

• Divestiture strategy: Assisting with portfolio review and creating an equity story for the transaction.
• Carve-out management: Designing the new company (NewCo) and managing the process.
• Transaction enablement: Ensuring smooth execution of the transaction.

Lastly, joint ventures and alliances: M&A consultants help clients shape the strategic rationale for partnerships and identify the right partners. They also support the setup of joint ventures (JVs) or alliances aligned with the desired goals and vision. Structuring a partnership requires consultants to assist with:

• Legal governance: Setting up the legal governance structure.
• Operating model: Defining the operating model.
• Long-term monitoring: Ensuring long-term success with ongoing monitoring.

Fewer than 25% of JVs achieve all their initial goals, and nearly 70% face challenges within the first three years.