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Advisors, Business Owners, CFOs

Why Advance Preparation Is Key to a Successful Deal


“We’ll start conversations with investors once we need the money.” “We’ll talk to buyers when we want to sell.”

At Axial, we often hear these comments from CEOs embarking on a sale or capital raise for the first time. Their expectation is that as soon as they’re ready to go, they’ll be able to find the right partner and get the deal off the ground.

Those CEOs tend to believe finding a partner will be a simple process of eliminating options to arrive at the best one:

0217_Deal Funnel Timelines_01 (1)

In reality, transactions usually end up looking more like this:

0217_Deal Funnel Timelines_02 (1)

Executing a debt/equity raise or M&A event isn’t a one-time action, but rather the culmination of months, if not years, of relationships and work. Think of your transaction as a funnel. A certain number of your relationships will drop off at each stage in the transaction, due to lack of interest, poor fit, and myriad other reasons. Every stage of the funnel will also inevitably take longer than you expect. Because of this, you must build multiple relationships well ahead of an intended deal to ensure you find a partner who is the right fit for your business.

The best strategy to streamline this process is to engage an M&A advisor or investment banker with experience in your industry or with deal outcomes (business sale, raising capital, raising debt, etc.) like the one you’re seeking. Your advisor can make sure that your goals are clearly outlined at the beginning of the process and introduce you to capital providers and/or buyers who are a good fit. Online platforms like Axial also help make the process more efficient, by enabling you to build relationships with people beyond your geographic area or immediate professional network.

Your company’s performance and market conditions, along with other factors, will impact how broadly you need to build out the top of your funnel. If you want to make sure you complete your transaction accordinging to your timeline, the most important thing to do is start early. Successful CEOs start building relationships at least a year, if not two or three, before a transaction — we recommend setting a goal of building two new relationships with advisors, investors, or capital providers per quarter.  When you start early, you…

  • Can afford to be more selective about the investor/lender/buyer/advisor with whom you sign
  • Have time to build deeper relationships with a future partner
  • Leave wiggle-room in case the deal takes longer than expected or you end up needing the money/sale before you first anticipated

With advance planning, the process usually ends up looking more like this:

0217_Deal Funnel Timelines_03 (1)

Thinking strategically about your transaction funnel makes it so that when you’re truly ready to move on a deal, you’ll already have the relationships you need in place. Transactions can be stressful, but preparing in advance will make all the difference.

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