16 March 2023

5 ways an analyst adds value for M&A firms

M&A analysts are a vital component of M&A firms. A good analyst is committed to digging through piles of material to find golden nuggets of information. However, they can often be underutilised. A good M&A analyst can not only increase the consideration achieved (and the fee earned), they can also be a core component for business development and the overall marketing effort of the firm.

From project delivery to winning more clients, here are five ways a good M&A analyst adds value to a firm:

 

1. Extensive research of prospective buyers and target companies

A good M&A analyst will not leave any stone unturned. At the very least an analyst will have access to a market-leading company database such as PitchBook, but this is just the starting point. A good analyst will identify and research companies via trade associations and exhibitions. The analyst will seek out trade publications covering any sector, no matter how niche, to get up to speed with current industry trends. They will identify serial and one-off acquirers domestically and internationally. They can sometimes find companies not even the client is aware of. The analyst will identify key M&A decision makers. Quite often the M&A analyst job is seen as a stepping stone to a more senior position; however, a good analyst will be completely committed to their role and stay in their lane. They will work fast yet diligently to turnaround work in a timely manner. The outcome is ‘actionable’ research and data that delivers results and is considered first-class by the firm and, most importantly, by their client.

 

2. Supporting business development: Pitch preparation

M&A firms often pitch for work and it is essential that partners, directors and executives have data to support their proposal. A good M&A analyst acts as a knowledge sponge, or perhaps as an investigative journalist, and will quickly become an expert in whatever industry they need to. Buyer pools, key acquirers, precedent transactions analysis, key industry news, quoted comparables analysis – all this is completed quickly and passed over to executives in a concise and presentable format. 

 

3. Supporting business development: Post-deal marketing

Post-deal marketing, or PDM, is often overlooked by M&A firms. 

At Ascent, we make our clients aware of this valuable, simple, yet highly effective exercise. PDM in our opinion should be an essential part of an M&A firm’s process. Simply, when a deal completes you actively target similar companies in the same industry and inform them you have just completed a deal. You have recent and proven expertise in the sector. You know the buyers and key valuation drivers, and have opened communication channels with key M&A decision makers, etc.

So how does a good M&A analyst help? In two ways. Firstly, they are your access – they will comprehensively research to find suitable companies to target and identify the key shareholders to address, whether it’s a single shareholder or a private equity firm that may be considering an exit. The second way they can help is to create a one pager (or something a little longer) with key industry information or IP generated in the project, just enough to wet the appetite for a target to respond to an email or pick up the phone for a chat. 

 

4. Raising your profile

In this content-hungry world, M&A firms should be consistently talking to their target clients. 

One of the most effective ways to do this is via a blog and consistent industry reports every month or quarter. Being consistent is key here, and a good M&A analyst will take responsibility for this and it will be a key part of their role whether the analyst is in-house or the analyst services are outsourced.

The blogs are great for SEO, and the reports arm partners and directors with excuses to reach out to key target clients. 

In reality a partner is not spending hours researching and analysing, so this is a role perfect for the M&A analyst.

 

5. Supporting negotiations with valuations and value drivers

When it comes to negotiations it is imperative that you are aware of precedent transactions and quoted comparable companies trading multiples. Why? When the first offer comes in you need to know whether it is good, bad or ugly. To do this you need benchmarks. The M&A analyst can take the lead on this by analysing transactions, including any historical transactions by the current bidder, as just one route.

For unknown industries they can also identify core value drivers and valuation methods for companies in their respective industries. 

Good M&A analysts are dedicated and versatile. We hope you’ve gleaned some ideas or inspiration to get more value out of your M&A analysts.

This blog was written by Ascent M&A Consulting, a provider of M&A analysts on demand. Ascent is dedicated to supporting M&A advisors complete bigger, better, and more profitable transactions. We also support business development initiatives by consistently providing first-class data & analysis promptly and cost effectively. 

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