Management advisers – what value do they bring to the negotiating table?

Working with management teams

Advisers play an important role in supporting management teams in many scenarios, for example when a management buy-out – or buy-in – is on the horizon. Offering tailored advice for each and every transaction, the first thing advisers bring to the table is a deep understanding of the dynamics, and sometimes conflicts, management teams can face during a transition of ownership. Not only that, as experts in their field, they provide management with the additional expertise they need to carefully navigate complex negotiations to ultimately deliver a successful outcome that all parties can agree on.

For instance, take me and my colleagues in Deloitte’s management advisory team. As a trusted adviser working alongside management, we take the time to understand their drivers, goals and future ambitions, and are focused on their best interests.  

Challenge when you need it most

This year has seen a huge rise in M&A activity, with many businesses being divested, bought or sold. With this ongoing competitive and transactional environment not looking to slow down anytime soon, trusted advisers are becoming even more important to management teams as opportunities arise.

At Deloitte, set aside from the traditional buy side and sell side roles, the team of specialist management advisers we have in the South West and Wales work closely with our clients, usually management teams but occasionally an individual senior executive, to ensure they have an informed understanding of their options in the transaction and the support they’ll need in negotiating an outcome that suits them.

We will provide all the information and advice our clients need to make informed decisions at all stages of the process, and when necessary, coaching and prompting management to ask the right questions at the right time.

Beyond negotiations

Negotiations are just one stage of a deal where independent advice is welcomed by management teams. But when choosing an advisor, management needs to consider: What else can the adviser bring to the table? What additional expertise may we need to get the best outcome for us?

At Deloitte, our experts are connected to a large network of local, national and international colleagues and we have access to multi-disciplinary, global teams that have strong sector expertise in a variety of industries that we can call on should the need arise.

With this at our fingertips, working collaboratively and tailoring our response for each transaction, our management advisory experts have a wealth of experience in and are able to provide independent, un-biased advice to management in many areas, including:

• identifying appropriate sponsors
• providing an independent view on the style and track record of private equity investors
• providing views on typical market practice for different transactions, including sector benchmarking expertise
• analysing each offer received considering tax implications and debt structuring, and providing in-house expertise from management tax and debt advisory specialists
• business plans
• negotiating management terms, and supporting and advising management teams through to completion and beyond
• modelling indicative returns based on different transactional structures and outcomes
• working alongside management’s legal advisers, advising on the commercial aspects of all required legal documentation.

Rolling up our sleeves

Looking at this in more detail, our clients welcome this hands-on approach and we believe it can add yet more value to the relationship. It can be explained as a way to provide additional financial and reputational benefits to the management team, such as:

• wider M&A sell side and buy side expertise that will support the management team in instances where the sell side adviser might ask management to do the heavy lifting
• support in planning, preparing and executing an efficient management buyout process
• determine whether a strategic competitor is the right fit or whether a private equity firm is a more practical option
• provide an overview of the key features of a private equity transaction
• team coaching of new roles prior to deal completion.

Looking to the future

In my view, management advisers will continue to play a pivotal role in M&A for the foreseeable future as we continue to see an uptick in deal activity.

The impact of the pandemic in 2020 resulted in significant disruption to business strategies and fast-tracked many companies to seek out opportunities outside their existing operations to bring in-house critical capabilities or access new markets, as a way to strengthen their value proposition. As such, management advisers will continue to support management teams as they look for future investment, new acquisitions or a planned exit.

How we can help

Whether you are just starting to consider the potential future options for your business, or are in the middle of an ongoing transaction, my colleagues and I would be happy to talk you through your options.