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How to Develop an M&A Strategy that Aligns with Your Growth Story

Businesses have relied on M&A as a means of inorganic growth for the better part of a century now. You’d think after 100+ years that we’d have some sort of universal guide for crafting the perfect M&A strategy. We obviously do not, and the reason for that is simple – no two M&A opportunities are alike. Each comes with its own unique and often complex set of factors to consider. However, many share the same core challenges. 

I asked three corporate development leaders from LLR and our portfolio companies to share some of the most important considerations in developing a successful M&A Strategy. They bring perspectives that span multiple offices (Corporate Development, CFO, General Counsel) as well as industries (Industrial Tech, Healthcare, Software), but their advice is closely aligned. 

Here’s what they had to say about how to develop an M&A strategy, who should be involved, and what to do when faced with an opportunity that doesn’t align.

Jesse Gray: Vice President, LLR Partners

Develop an M&A strategy by asking yourself 3 key questions

The development of an M&A strategy should always start with three key questions: What is the value creation thesis of your company? How does the target make you, the buyer, better? How do you make the target better?

Know what strategic outcomes you ultimately want from engaging in M&A and consider the implications for both the buyer and seller. Is your goal to enter a new end market? Are you purchasing customers or contacts to geographically expand? To stay focused, always come back to how you answered the first three questions as you consider opportunities.

I am a firm believer in total organizational buy-in when creating an M&A strategy. Executive level management should define the strategy, but people in each department impacted by acquisitions should have input. Keeping teammates abreast of the strategy and development, while gaining their enthusiasm and engagement early will serve the organization well in the long run.

When you encounter an opportunity that does not align perfectly with your original strategy, return to these key questions that defined it. Markets and businesses change, and it is okay to adapt accordingly, if still making the company better and more valuable. Veer, yes, but veer with a thoughtfully revised strategy.

Joe Luceri: former CFO/COO at Numotion; former Chief Development Officer, Schweiger Dermatology Group

Stay the course and focus on the value drivers

Developing an M&A strategy requires knowing what makes your business successful now and what acquisitions can add to make the business even better in the future. It will help you clearly define the value proposition for both the buyer and the seller, as well as the value drivers that should guide acquisition decisions.

Leadership, investors and the board must be aligned on these fundamentals. The biggest mistakes happen when you don’t adhere to your fundamentals. Stick to what you believe are your core values, stay in market, don’t take on too much risk or stray too far from your strengths. Also make sure you consider the stress factors on your business to buy and integrate another company. Your organization must be ready to handle it while at the same time giving employees the support they need to get their primary jobs done.

In healthcare services, you want to make sure there is available capacity to facilitate growth and/or a captive market for ancillary services. Most often you’re buying the producer (the physician) so alignment with his or her personal goals is absolutely critical.

From time to time, things come your way that are more opportunistic. Ask yourself, is the downside risk significantly less than the realistic upside opportunity? Are the seller’s goals aligned with what you want to do? Look at the fit. Will integration require a fundamental change in either business? The answers are rarely black and white but unless you can go back to the initial exercise and clearly articulate the value drivers, stay on course with your original strategy.

Ed Spaniel: legal and corporate development lead at SDI Health (sold to IQVIA in 2011), SICOM Systems (sold to Global Payments in 2018) and Edmunds GovTech (current)

Align an M&A strategy to the growth story you want to tell

I look at M&A strategy development similarly to Jesse and Joe, but from my perspective these are the key considerations when defining strategy: What is your vision for where you want the business to go? How will acquisitions affect the growth story you want to tell? and Is the inorganic value you’re adding something you definitely want to buy (vs. build or partner)?

The more team members you get buy-in from on the macro points of your M&A strategy, the better. Engage a broad group – business development, operations, sales, R&D, financial, legal and your Board – in the early days. By example, lawyers are frequently not brought in until a letter of intent is negotiated, but a legal perspective on deal structure from the outset helps maximize value and avoid headaches later. Similarly, understanding your R&D team’s view of the desired technology platform is key to defining M&A focus. Of course, discretion may limit this group with respect to individual opportunities, but make sure you have alignment on overall strategy from your stakeholders.

Thoughtful development of an M&A strategy should tell you as much about the businesses you should not pursue as those you should. The challenge is to stay true to your strategic direction, not allowing yourself to be distracted by acquisitions that don’t keep you on the story line you want to tell 3-5 years out. People often make mistakes here. Let go of the pursuit of good assets if they aren’t a good fit. All the work (hours and more hours!) you do to meet and evaluate companies, only to walk away, is not wasted. It’s part of staying true to the thesis and testing and achieving your long-term vision for the business.

This article was originally published on LLR Partners’ website

About LLR Partners

LLR Partners is a lower middle market private equity firm investing in technology and healthcare businesses. We collaborate with our portfolio companies to identify and execute on key growth initiatives and help create long-term value. Founded in 1999 and with more than $5 billion raised across six funds, LLR is a flexible provider of equity capital for growth, recapitalizations and buyouts. Learn more at

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