Considering a Business Merger or Acquisition?

At this year’s Hillcrest Bank Growth Summit, we had the opportunity to listen in on an insightful panel featuring Chad Gardiner, Managing Director at Bridgepoint Investment Banking; Michael Bennett, Managing Director at Crewe Capital; and James Morgan, Managing Director at Forbes Partners. Their discussion centered on how business owners can thoughtfully position themselves for mergers and acquisitions (M&A) in today’s economy.

Our top takeaways:

• Understand the shifting market and what drives valuation
• Consider creative deal structures that bridge the valuation gap
• Start preparing early to reduce perceived risk and improve outcomes

Understanding Market Drivers and Valuation Shifts

When considering M&A, aligning with market expectations can add significant value to your business. This is not about ambulance-chasing new opportunities, it means understanding what today’s buyers prioritize and preparing your business accordingly.

Business leaders are returning to growth-mode, whether that is through acquiring a competitor or merging to expand their service offerings. While specific sector trends can fluctuate, businesses with strong financial fundamentals tend to perform well in any market. Businesses with healthy margins, growth potential, and clear strategic value are more likely to attract capital.

Creative Structures to Bridge the Valuation Gap

Recent years have seen a shift in seller expectations due to unusually high valuations during the 2021 peak. One thoughtful approach to navigating this gap is through alternative deal structures like equity recaps or staged exits.

For example, some business owners may choose to sell a majority stake now—say 60%—and retain a minority interest for a few years to benefit from future growth. These structures allow sellers to remain involved and share in long-term growth, while helping to manage buyer risk.

If you’re contemplating a sale, it may be helpful to explore these options with a trusted advisor who can help you find a strategy aligned with your goals.

Preparing Early to Maximize Value

Risk is a major factor in how buyers evaluate a business. While some risks, like revenue concentration or heavy reliance on vital employees, will not show up on your balance sheet, they can influence valuation.

Being proactive about de-risking your business can make a meaningful difference in how it’s viewed by potential buyers. For example, introducing a long-term employee retention plan or diversifying revenue streams could help reduce risk and improve deal terms.

Engaging advisors early in the process can also be valuable. The right partner can help you understand how everyday business decisions impact valuation, assist with KPI alignment, and assess your financial operations to ensure you’re due diligence ready.

Final Thoughts

M&A can be a strategic path to growth—but success often comes down to preparation, structure, and timing. By understanding market dynamics, addressing key risks, and engaging the right financial and legal advisors early, business owners can position themselves for a transaction that aligns with their long-term vision.

Whether you’re just starting to explore a sale or actively preparing for one, keeping these considerations in mind may help you unlock greater value when the time is right.