Understanding how to use data effectively during the M&A exit prep process is a game-changer – especially for sellers. Data not only accelerates and optimizes the process, but it also enhances outcomes by providing and proving the value to target buyers. Every company has data, but – without proper analysis and understanding – leveraging that data for strategic decision-making can be challenging.
Understanding the Challenges
Business owners enter the M&A exit planning process with idealistic expectations – only to face the harsh reality of a complex and prolonged due diligence journey. The reality is that most companies looking to sell do not succeed because a data-starved exit results in a lower valuation.
What does that look like?
- A reliance on intuition (resulting in misguided strategies)
- Unoptimized cash flow and pricing strategies
- Lack of market insights (resulting in poor targeting decisions)
- Unnoticed operational inefficiencies deterring growth
Data is critical to addressing these challenges and making the business more marketable for exit.
Data is the Solution
Data empowers business owners with the information they need for a successful exit by highlighting the company’s strengths, identifying areas for operational improvement, and improving market positioning.
To illustrate the solution, let’s look at a prime example of a company that uses data effectively during the M&A exit planning process.
- Management: The leadership team takes a data-driven approach to setting strategy, making operational decisions, and monitoring the health of the business.
- Finances: The controller uses financial metrics to improve strategies surrounding cash flow, pricing, and timing of payables.
- Operations: The operations team uses data visualization dashboards to guide production and efficiently fulfill orders, reducing waste.
- Positioning: Management also used data to position in the market for the largest growth potential.
Across the company, ongoing KPI tracking ensures the business remains healthy and is ready for the final evaluation.
Success as a Result
Proper data use enhances a company’s position in the market and valuation, resulting in a more successful (and less painful) exit.
As Matt Gilbert, founder of Gilbert & Parue (GaP) Transaction Advisors, put it: even a small amount of well-used data can increase business value. At infoFluency, we specialize in transforming business data into actionable insights that M&A due diligence teams can use to improve valuation for better exit results.
