Four Key Ingredients to a Successful Buy-Side Process

By Abby Roberts, Sr. Director, Product Marketing, Corporate Development

Much like a great recipe, a successful buy-side transaction is a skillful blend of key ingredients and execution. And the higher the quality of the ingredients, the better the end result. To develop Datasite Acquire, our dedicated buy-side platform, we interviewed hundreds of buyers to discover what those critical elements for a successful M&A process were. So, boiled down, what are they?

1) Ensure executive alignment and buy-in

Leading dealmakers agree that executive alignment is the number one factor that drives success in deals. At a recent Datasite webinar, one corporate development executive described his review of more than 150 acquisitions that his firm closed over the last 10-plus years. After performing an in-depth analysis, his team learned that the most accurate predictor of success was executive alignment. If there was strong executive alignment at the top pushing the acquisition forward, the deal was much more likely to be successful in the short and long-term.

2) Strengthen cross-team collaboration

Cross-team collaboration is another essential to optimize the buy-side process. In our recent survey of corporate dealmakers, The Future of Transaction Management, cross-team collaboration was called very or extremely difficult by 43% of respondents – including 55% at $1bn+ organizations.

This should come as no surprise. With buy-side review teams often stretching to 50 or people, maintaining appropriate levels of transparency and information sharing with your deal team is an ongoing challenge. But when your larger team is working blind, they can miss important facts or make costly assumptions about integration planning or future org structures, for example.

With so many stakeholders at play, improving cross-team collaboration is easier said than done. Best practices include ensuring the wider team understands the deal’s strategic objectives and works together on identifying key dependencies and risks. New project management and collaboration tools that increase team awareness of big milestones and key due diligence findings can help address some of these gaps.

3) Develop repeatable processes

With corporate development teams juggling potential buys along with other transaction types like partnerships, creating a standardized, repeatable process is more important than ever. To make it customizable, break your process into bite-sized chunks. For instance, you can create a templated due diligence checklist that covers 80-90% of the documents you’ll need for every deal.

Review your process to break-out and create templated approaches for other parts of your process. One area where buy-side teams tend to struggle, for instance, is analyzing their extended team’s due diligence findings. Relying on different functions to clearly articulate central issues like findings type, priority, and status can quickly open the door to miscommunication. Instead, develop a template so the deal team can focus on the questions you need answered most.

4) Update your technology

One of the biggest impacts of COVID-19 was the move to an online-only environment, according to our recent Future of Transaction Management report. For example, 48% of corporate dealmakers in our survey described their VDR use as “continuous” – a 13% increase from the year before.

Harness this technology adoption jump for your own purposes.  Conduct a review of how your team uses technology today. What new buy-side tools can help enable your team? What current ways of working can be improved? Can platforms, tools, or invoices be consolidated and simplified? Change is never easy, but with huge productivity gains at stake, it is worth the effort.

Check out the bigger picture

If you’d like to learn more about how M&A processes and practitioners are evolving, register to access the on-demand replay of our recent corporate development roundtable. The first in a quarterly series, Corporate Development Outlook: Buyer’s Circle, takes a closer look at how dealmakers are navigating today’s landscape. It provides perspectives from top executives, together with the very latest Datasite Insights Q1 data on deal volumes.