What do M&A buyers really want? Once they identify the sectors, business models, and geographies in their sweet spot, determining the most attractive businesses often comes down to appraising their leadership.

Below, our Family & Founder-Owned Business Group shares their perspectives on how an effective management team can create long-term business growth and generate interest from buyers and investors.

Creating Continuity

The ongoing success of industry-leading businesses goes beyond the strengths of any one person in the organization. They’re built for the long term with a C-suite of capable professionals, carefully crafted to propel the business forward.

A vital purpose behind constructing a strong leadership team is to create continuity of operations, regardless of who owns the business. When a management team is aligned by the same mission and motivations, they can support each other to keep the company on track now and into the future.

From a buyer standpoint, a well-established, multi-disciplinary management team is a priority and key differentiator that can help drive a smoother M&A process. Buyers are investing in the proven track record of a company’s leaders, banking on their capabilities to take the business to new heights. And although assets, scale, and technology are all highly sought-after traits of winning businesses, it’s the people who execute and drive a company’s strategy each day that create prolonged success.

As a testament to management’s importance to a successful sales transaction, buyers may use strategies to ensure key employees remain with a company under new ownership. For example, talented players with deep institutional knowledge can be offered multiyear employment agreements or given the opportunity to contribute equity to the new deal alongside the buyer. Efforts like these make certain everyone's interests are aligned and the business is best positioned for success.

Maximizing Talent

Assembling an experienced management team is just one part of the puzzle.

A company’s C-suite is its A-list cast of characters, each needing to be featured in the correct role to fully showcase their talents. To get leaders in the best positions to prosper, business owners need to be aware of their passions and dedicated to their growth. This allows every person to perform at their best and drive the future of the business.

If considering a sale, a business that invests in the strengths of its senior leaders can help prove it’s prepared to go to the next level. Buyers are looking for a C-suite with a shared strategy that has its members in the right seats to support and shape it.

Ensuring key roles are filled, like having a sales leader to drive new revenue and a COO to focus on operational efficiency, creates strong trust with buyers that management is addressing all aspects of a company’s success. Additionally, having a team with the interest and ability to lead acquisition strategies and fuel inorganic growth can be highly appealing, particularly to private equity buyers.

Within a company’s management team, financial roles are often the most crucial seats to fill. CFOs and other senior finance professionals must have versatile skill sets to perform a variety of critical tasks. These multifaceted roles are essential to a business, overseeing it from expense control and investment perspectives while ensuring all numbers are accurate and reported on time.

Due to these factors, financial roles carry tremendous weight in displaying a company's integrity when entering the sales process. Successfully selling a company requires a deep understanding of its granular data, especially when it has complex financials featuring multiple lines of business, international operations, or a range of facilities. If a business can quickly and precisely answer all data-related questions, it can build immense credibility and further its appeal to buyers.

Leadership Is Key

Optimizing a company’s management team should be a priority for business owners to achieve long-term success. Accomplishing this means putting key leaders in the right positions to thrive and shape the business’s strategy into the future.

By establishing a C-suite of top-performing experts, companies can grow into long-lasting industry leaders and become highly sought after by buyers and investors.

Harris Williams is a global investment bank specializing in M&A advisory services. Our Family & Founder-Owned Business Group serves as a thought partner to family-owned and founder-owned businesses as they explore new growth opportunities through M&A.

To learn more, please contact our senior bankers.