Making M&A Part of Your Long-Term Business Plan

As a business owner, deciding to transition from your company may not be at the top of your priority list. But change happens, whether due to retirement, new ventures, or shifting priorities. It's not too early to plan for this transition proactively. Doing it the right way can take several years of preparation.

Mergers and acquisitions (M&A) is often a neglected strategy for securing your business's future and maximizing its value, especially for owners of privately held companies. If you don't plan to pass the business to heirs, selling to the right buyer can help ensure continuity, preserve your legacy, and create financial value.

Preparing your business for sale well in advance can significantly impact the price you receive and the ease of the transition. Your buyer may be a financial or strategic buyer. In every case, however, they evaluate businesses based on factors from financial stability and growth potential to operational efficiency.

Even if a sale isn't in your immediate plans, understanding the fundamentals of M&A can help you build a more substantial, more resilient business for the future.

How the M&A Process Works

Selling your business isn't as simple as finding a buyer and signing a contract. M&A transactions follow a structured process, often taking several months or longer. Understanding the key steps can help you navigate the complexities and avoid surprises.

Starting early and working with experienced professionals can make the difference between a straightforward transaction and a drawn-out process or a lower sale price than expected.

• Assess your business's readiness for sale. Buyers look for financial transparency, strong operations, and future growth potential. An M&A advisor can help position your business attractively in the market.
• Next comes marketing your business to buyers. Serious buyers don't just appear. Instead, you'll need a strategy to find and engage the right ones. Many sellers work with M&A Advisors to create a competitive process, which generally helps to achieve the best outcome.
• Keep due diligence in mind. Due diligence is a buyer's in-depth review and verification process to assess a business's financials, operations, legal standing, and risks before finalizing a deal. Buyers will scrutinize everything, from cash flow trends to compliance records. Making the process smooth signals to buyers that your business is well-run. It may lower the risk of delays or price reductions.
• Plan for a smooth transition. A successful sale requires more than just closing the deal. You also should prepare for what comes next. To increase the chance for an acquisition to succeed after you sell, employees, customers, vendors and key stakeholders should experience a seamless transition to maintain stability and preserve the long-term value you spent so many years building.   

How to Build a More Valuable Business

The businesses who are successful have spent years strengthening their financials, operations, and management. Even if you're not planning to sell in the next five years, making these improvements can increase your business's value, resilience, and long-term success. These are often no-regret changes—whether you sell in the future or continue running your company indefinitely.

Keep these four principles for creating value in mind.

Financial health comes first. Buyers want businesses with steady revenue, strong profit margins, and clean financial records. If your books are disorganized or outdated, it creates uncertainty. This uncertainty leads to lower offers or deal delays.   

Tip: Work with an accountant, banker, or financial advisor to help ensure your records are accurate and ready for scrutiny.

Operational efficiency drives profitability.

The more smoothly your business runs, the more attractive it is to buyers. You can always benefit from streamlining workflows, documenting key processes, and reducing dependencies on any single employee—including yourself. A business that can run without heavy owner involvement is far more valuable in the eyes of a buyer.

Tip: Work with your teams to create plans for running the business when key staff are absent for two weeks or more. You can even test them out by taking an extended vacation.

Technology and infrastructure matter.

Outdated systems slow growth and create risks. Whether upgrading IT, modernizing software, or improving cybersecurity, investing in infrastructure are key components of making your business more scalable and easier to transition to a new owner.

Tip: Consult a tax accountant and your banking team to consider taxefficient, cash-flow-friendly ways to finance these improvements.   

A strong management team increases confidence.

Buyers look beyond financials. They want to see leadership depth. If all key decisions rest with you, a buyer may hesitate or discount their offer. Developing a reliable team that can operate independently makes your business more appealing and reduces perceived risk.   

Tip: Identify potential leaders who are already on your team and consider long-term leadership potential when making new hires.  

What to Expect from Professional M&A Advisors

Getting the best deal requires a competitive process managed by experienced professionals who can negotiate favorable terms and guide you through due diligence and closing. Although navigating an M&A transaction is complex, there's good news. You don't have to figure it out on your own. The right team of advisors can help you maximize your business's value, find the right buyer, and manage the deal process efficiently.

Financial advisors, legal counsel, and accountants play essential roles. Each professional brings expertise to the table. Financial advisors help position your business for sale, legal counsel verifies contracts are airtight, and accountants help to ensure clean, transparent financials.

Your bank is also a key resource. Banks with investment banking and advisory services, like M&T Bank, can provide relevant M&A advice and financing solutions, conduct a competitive sale process, and guide you through structuring a deal that aligns with your goals. They also help ensure your financials are in order, which is critical for attracting serious buyers.  

By establishing relationships with trusted advisors early on, you'll be better positioned when the time comes to sell, whether five years from now or further down the road. Reach out to us for more information on how we can help.

Author: Brian Dettmann

Brian Dettmann is the Head of Mergers & Acquisitions Advisory at M&T Securities, Inc., an affiliate of M&T Bank. He is a seasoned professional with over two decades of experience in M&A across various industries, including business services, security, manufacturing, distribution, logistics, and technology.