In a post-pandemic, war-tormented, and economically volatile world, the Mergers & Acquisitions (M&A) industry emerges as a promising choice for global businesses. Whether through a complete ownership change or two or more enterprises joining forces, assets are either consolidated or combined, helping companies stay agile – a trait crucial to remain on top of the ever-evolving market.
However, even the M&A wasn’t immune to problems like the 40-year-high inflation, shifting interest rates, and continuous quantitative tightening, falling into stagnation in recent years. And though the latest Deal Barometer reignited a level of optimism in this sphere, predicting the 2024 US corporate and US private equity M&A deal volumes to rise, that journey is expected to be a slow one.
According to Dino Lucarelli, CPA, the leader of Capital Tactics Inc., this unrushed M&A improvement is caused by the pervasive myths that permeate the industry, filling entrepreneurs with unnecessary fear and uncertainty. Leveraging his broad expertise and hands-on experience, Dino’s mission is to shed light on the field and dispel untrue notions while reinforcing the importance of ethics in successful deal-making.
To truly elevate societal M&A awareness, Dino shatters a misconception that paints a skewed picture of the very foundation of the industry: a common perception that M&A deals should be straightforward and without complications. While many entrepreneurs fear that unethical practices and other dangers are hidden within complexity, Dino stresses that the landscape’s nuances are not to be shied away from but embraced as a safety guarantee.
“Complexity in a deal ensures that all aspects of a business are thoroughly vetted,” he explains. “When a deal involves multiple layers of due diligence, it reduces the chances of overlooking critical issues that could jeopardize the transaction or the business’s future.”
Intricacy is an innate element of M&A, with any major deal involving numerous parties, from buyers and sellers to attorneys, accountants, and advisors, all of whom have unique interests, requirements, and goals. Addressing the complexities that may arise—for instance, by evaluating the tech infrastructure with the help of IT specialists—helps assess potential liabilities, fostering a transparent environment where ethical standards are met and everyone benefits.
Though the business realm requires owners to keep their finger on the pulse, M&A deals are more about meticulous structure than urgency, says Dino. According to this expert, up to 180 days is an optimal time for a complex deal to close, with certain cases extending to a year or longer. By helping clients understand the ins and outs of M&A transactions, Dino empowers individuals to mitigate risks and make informed decisions.
Private Equity (PE) firms are also daunted by disadvantageous myths, with many owners believing that selling their business to a PE company isn’t a lucrative choice. The stereotypes vary from PE exploiting or undervaluing other enterprises to imposing unfavorable terms, significantly hindering this group’s success in M&A.
While caution is always advised, Dino challenges this common perception by highlighting the benefits PE establishments can offer: “Private equity firms exist to acquire good companies and enhance their lives. They bring both intellectual and financial capital to the table, significantly boosting a company’s growth and profitability. Like in any industry, Private Equity isn’t immune to bad actors. But to let individual bad experiences inform all PE-revolving decisions is short-sighted.”
He further elucidates: “Private Equity firms often offer higher purchase prices, are more accommodating to sellers’ requests, and have both the expertise and resources to drive an M&A deal to completion, resulting in a robust partnership and a successful exit strategy. Many of them are also led by professionals whose goal is to create a win-win scenario for buyers and sellers. These experts – value-based, moral, and with a true passion – are the ones who suffer the consequences of these myths the most.”
In an uncertain economy, people globally are seeking various ways to reduce costs, and entrepreneurs are no exception. This, often mixed with overconfidence, results in the widespread myth that professional M&A negotiators are supplemental, and not a necessity. With education and rigor central to its philosophy, Capital Tactics shatters this norm, proving that experienced negotiators are an instrumental part of an ethical, successful deal.
“Misinterpretation of terms can be fatal to a deal,” Dino warns. “Professional negotiators ensure that all parties understand the terms and that the deal structure is fair and beneficial across the board.”
To illustrate his point, Dino alludes to a recent client who decided to handle negotiations directly with the seller. Different opinions, unaligned goals, and miscommunication led to a misunderstanding that – despite months of preparation – ended the deal. “The client assumed that the seller would be able to ‘figure it out,’ but that’s rarely the case”, Dino says. “Our role as negotiators is to bridge these gaps and ensure that both parties are on the same page, both while the deal is made and in the future.”
At the heart of Dino’s myth-dispelling mission is the role of ethics. In the M&A landscape, where intricate terms meet numerous parties – all with unique experiences, skills, and requirements – partnering with a value-driven and apt PE firm can make or break success. By debunking misleading notions, Dino aims to educate business owners while enriching M&A deals with trust and integrity, ultimately positioning Capital Tactics as a haven that can guide clients to entrepreneurial prosperity.
“Understanding the realities of M&A can empower business owners to make informed decisions and pursue opportunities with confidence,” Dino Lucarelli concludes. “Our goal is to demystify the process, alleviate fears, and uphold the highest ethical standards in every transaction. It’s not all about profitability and the ‘next big move.’ At Capital Tactics, it’s about curating business strategies that are as future-forward as they are ethical and transparent.”
