Recently, I had the pleasure of interviewing a client whom we worked closely with for several months on the sale of a software company he had co-founded with a couple of partners. He had graciously agreed to do a webinar with us to tell his story of selling a business, from a client’s perspective. During the interview, I asked him why he and his partners engaged our firm.
One of his answers surprised me – Personal Chemistry! Yes, he cited many of the usual qualities we tout: deep M&A dealmaking experience especially with technology companies, knowledge of the software sector, international reach, and senior professional attention. However, the one that surprised me was his emphasis on the importance of Personal Chemistry in making their decision to work with us.
What did he mean by Personal Chemistry? As a serial entrepreneur who had seen multiple company ‘exits’ over the years, he had a seasoned perspective. He said he knew there inevitably would be some ups and downs along the way, and they wanted to work with a team they liked and trusted. One they could work collaboratively with to solve problems and handle challenges together as they arose. He was right there were challenges – as there are in every M&A deal – but we worked harmoniously with them and their legal and other advisors, to overcome these challenges and successfully close their transaction.
This conversation got me thinking about all the ways in which Personal Chemistry is a key ingredient in M&A dealmaking. Here are a few examples where it is vital:
- Outreaching to Potential Buyers – the initial contact, a tailored email addressing specifics as to why they should be interested in the opportunity from their Company’s perspective, followed up with a phone call, are critical steps in establishing credibility and generating interest in the opportunity.
- Negotiations – it helps to establish a rapport with the buyer(s) first, and develop a level of trust early on, prior to delving into the deal negotiations.
- Due Diligence – assembling and disclosing the mountain of information requests and responding to the myriad of follow up questions, additional information and analysis needed, takes not only attention to detail but also day-to-day handholding and emotional support throughout the process to reach the closing with sanity preserved! Upfront preparedness makes all the difference so you’re playing offense not defense.
- Driving to Closing – fostering the give and take on numerous deal points, working with differing agendas and personalities on both sides takes diplomacy, thoughtfulness, and trust to work through the inevitable deal ‘speed bumps’ along the way and achieve the desired goal of closing a mutually rewarding transaction.
While dealmaking experience, financial acumen, and industry knowledge are essential to a successful M&A process, the importance of Personal Chemistry in orchestrating the best outcome for all cannot be underestimated!
Jan Robertson is Managing Partner & Co-Founder of SiVal Advisors, a Silicon Valley-based technology M&A advisory firm. Click here to access clips from her interview with SiVal client Arif Janjua, former Chairman and shareholder of software company Citilabs Inc. which was acquired by Bentley Systems in 2019.