81% - that is our current internal metric over the past 4 years across more than $2 billion in transaction value.
Mergers and acquisitions advice is a low volume, high touchpoint service where millions of dollars are in the balance for clients and shareholders.
At Nash Advisory we take on approximately 10-12 sell side clients per year, aiming to maximise sales proceeds to the shareholders and limit their legal and financial risks in a transaction.
With good planning and preparation, combined with running a strict sale process we achieve a success rate of over 80% at Nash. We have found that there are three main reasons why a transaction will not be successful:
- Client gets starry eyed: There are reasonable offers for the business based on market based valuation metrics and market conditions, but a client decides that their business is worth more than the offers received. Often a client may increase their value expectations between starting the engagement and receiving offers.
- Underperforming business: The performance of a client's business is trending downwards during the sale process, making it difficult to agree a valuation between buyer and seller.
- Low interest: In some instances, there are no offers received for the business after an active marketing campaign. In our experience this occurs in 6% of transactions. The key reason is that the client was extremely unique in their sector and product; or that they had experienced a significant improvement in performance and bidders were uncertain whether that performance was sustainable in the long term.
A key factor in why our success rate is above 80% is that we will thoroughly evaluate new clients against the above three factors, before committing to a sale process. We often decline mandates when we do not believe the Vendor has a reasonable value expectation or the business is not what it seems. On average, we invest 1,000 hours in completing a sale process, so we must be confident that a process will lead to a successful transaction.
In conclusion, by following our Nash methodology there is a high likelihood of achieving a successful outcome. Planning and preparation, combined with running a strict and exhaustive sales process should achieve a strong result.