Closing a Mega M&A Deal During a Global Pandemic is Possible. Here's How.
As a business leader, committing to a merger and acquisition (M&A) is one of the most crucial, difficult decisions one can make, as the results have long-lasting implications on customers, prospects, employees, and the overall industry at large. Adding to the complexity, this year, the world continues to battle a global pandemic that knows no borders or end — making leaders even more uncertain as to whether or not they should dive head-first into any major deals.
From my own experience, the risk is worth the reward. Earlier this year, as the CEO of a global software security company working with tech brands like SAP, Salesforce and some of the leading financial institutions in the world, our team decided to take the plunge, closing on a $1.15 billion M&A deal with a private investor. While some thoughts went into the idea in late 2019, the final stages of the deal were executed during the onset of Covid-19, affecting nearly every touchpoint with our partners. This was the second time we navigated an M&A deal; however, the circumstances and lessons learned were certainly different.
As we enter a new phase of conducting business across the globe, I’d like to share some key takeaways from this once in a lifetime experience, as they’re truly applicable to navigating any pivotal turning point in a company’s journey.
Be Nimble, Move Quick and Stay Firm
Traditionally when closing a M&A deal, business leaders will have several in-person meetings with their investors. It’s a common part of the process that helps forge relationships, as well as iron out final details. In closing our company’s mega deal earlier this year, we didn’t have that luxury — in fact, we conducted this against a backdrop of a major global pandemic.
As a result of Covid-19, for these specific M&A negotiations, the process was put on steroids. We knew we were running up against the clock — flights were being canceled, travel bans were being implemented — so we launched a 'flash process’ where we recruited the top private-equity firms in the world. We met a number of them and told them to take two weeks to look at our company and decide. The speed added to the excitement and momentum we were building, while also adding an element of stress given the escalated timelines and urgency on both ends to solidify next steps.
To add to the increasingly stressful equation, on the day of the bidding from investor contenders, the Dow plunged 10 percent in one trading day, making ‘Black Thursday’, March 12, the fourth worst day for stocks in history. Despite the end of the world backdrop, we ultimately closed the deal. It was terrifying, yet exciting, all at the same time.
As it goes with any successful business, obstacles are meant to be overcome. As a business leader, you never know 100% what’s ‘right’ in that moment of time — but by being flexible in some details, moving quickly in the face of adversity and staying firm in values that most matter, you’ll have a greater chance of success throughout the process.
Adopt the Right Mindset
Most successful business leaders don’t set out to start a company to sell it. In fact, with that mentality, they’re setting themselves up for potential failure. Leaders should, however, have a very clear understanding of what they want to do next with their company at every stage of the journey, and I personally believe the most successful organizations are in it for the long haul (which is a big reason why we decided to go the PE route). Our aim was not to get to a billion dollars, or let a bigger company buy us out. We know we are at the heart of the software security market, and this deal was more of a validation of that.
During the M&A process — starting from the very early conversations — I focused on one thing: keeping the core values of our company intact. I wanted to continue on with our tight-knit culture, commitment to customers, and drive to create a more secure business environment. I never viewed the deal as an exit, but instead, a stop for fuel. We’re refueling the tank for the next 300 miles, to further our capabilities and reach more organizations worldwide, during a time when software security is needed most.
Know your mindset, well before M&A considerations even begin. Stay unwaveringly committed to it. Not only will this help business leaders stay focused throughout the M&A process, but it will also help forge stronger relationships with employees as they embark on the journey alongside you.
Talk the Talk, Walk the Walk
A global pandemic is certainly no small matter, but throughout the obstacle, it’s important to continue leading your business to growth. It’s even more important to innovate to stay at the forefront of emerging trends during particularly transformative points in time.
Publicly display your successes. Have customers be your advocate. The best business leaders create an indescribable vibe in their respective industries that lure investors — it’s the notion that you’re the next big thing, the next unicorn. If you talk the talk, and walk the walk, then you’ll have greater chances of selecting the best investor that aligns with your business goals.
At the end of the day, successful M&A deals come down to relationships. First, you have to attract your type. You have to do this by showcasing your successes, having great references, and building momentum to eventually create a pool of potential investors looking to speak with you. From there, the ‘dating’ process begins. You’ll have a lot of conversations, until eventually, you find the one to marry. It’s a lifelong, permanent decision, and this story should serve as proof that it’s still possible amid a pandemic or any other challenge that you encounter along your journey.