From defence to healthcare, education to R&D, in sensitive sectors where confidentiality is a critical concern, mergers and acquisitions present a unique set of challenges. Owners and shareholders in these markets not only have to navigate the intricate demands of regulatory compliance but also carry out effective M&A strategies under the high expectations of confidentiality. As ethical and investment factors continue to transform, these complexities only intensify.
Loïc Bourdonnec, Associate Director at LAVA Advisory Partners, has been instrumental in steering our recent M&A deals in these markets, working across varied sectors including defence and education. His expertise, technical skill, and strategic insight have been pivotal in managing the intricacies of these high-stakes transactions.
Below, Loïc shares his insights into executing successful M&A strategies in these challenging environments. He discusses the importance of managing confidential information, the need to build authentic trust networks, and the art of balancing effective M&A practices with protecting highly sensitive information.
What are the primary challenges facing those selling in sensitive sectors?
One of the main challenges in an M&A process is extending information to interested parties. Typically, buyers want to access detailed information. It’s about finding the right level of information to share – whether that’s down to your own comfort or sector requirements, like in the defence sector with regulatory requirements or in private education, where the risk of parents becoming concerned about changes in ownership of independent schools is always front of mind for sellers.
Another common obstacle we’ve seen recently involves navigating and understanding various regulatory requirements from certain stakeholders in a sector, particularly if these parties are government agencies or public sector actors. As M&A advisors, we work closely with legal advisers to factor in the timeline impact of any regulatory requirements which could impact the process, such as clearances under the National Security and Investment Act (NSIA).
Ensuring the deliverability of the whole process while maintaining strict control over the confidentiality of information is another factor to consider. In our experience, going into bilateral processes rather than into competitive auctions can be more appealing to clients wishing to limit as much as possible the risk of confidential information going public.
Again, it’s our role to clearly present to our client what are the risks and rewards of different options and routes to market.
What are some of the main strategies LAVA employs to tackle these challenges?
Firstly, we work closely with our clients to clearly define their objectives and potential concerns. This involves a very hands-on approach, spending time upfront to really get to know those we’re working with, gaining trust and precisely defining how to release information and go to market.
We are very well versed in operating under Non-Disclosure Agreements (NDAs), Virtual Data Room (VDR) protocols, and understanding the type of questions and requests from potential buyers, which helps us anticipate needs and prepare our client to share information at the right time.
We are very proactive in maintaining our market intelligence and keeping our finger on the pulse of the market.
For instance, we’ve found that recognising dynamics in forums like conferences, where sector players gather and share information is crucial. LAVA has deep knowledge across a wide variety of sectors including defence, manufacturing, education, tech, hobbyist retail, and with each different industry, we are very aware that our role extends to understanding factors outside the deal perimeter that could impact the environment.
When it comes to bilateral processes and competitive auctions, the team has extensive experience in managing both types of M&A processes, which can mean different confidentiality requirements and information disclosure, as well as a different pace in terms of information disclosure. It’s all about leveraging our market experience and understanding of the buyers’ needs to uphold confidentiality.
By understanding and navigating these diverse processes, we tailor our strategies to each deal’s specific needs, ensuring streamlined and secure transactions for our clients.
In highly sensitive M&A deals, how do you manage the delicate balance of strict confidentiality with the goal of securing the best outcomes for clients?
It’s about gaining authentic trust from both our client and potential buyers, maintaining a continuous dialogue about managing the process and defining the right approach. We combine a highly tailored process with our market intel, narrowing the pool of interested parties to those most likely to transact.
By conducting market intelligence anonymously and presenting actionable options, we also ensure that no named information about our client or any confidential information is shared prematurely.
What evolving trends do you see impacting M&A strategies within this sector?
In the M&A sector, especially in the mid-market, there’s a growing trend towards customised approaches. Building trust and reassurance with business owners throughout the process is key.
As with all our M&A deals, but particularly within this space, we believe in finding the right partners through a dedicated process, rather than a blanket sharing of information.
Are you an owner or shareholder of a business evolving in a sensitive sector, looking to master the balance between regulatory compliance and effective M&A outcomes? LAVA Advisory Partners is at the forefront of reshaping the approach to M&A in sensitive markets. We’re not just taking part in the conversation; we’re driving it, setting new standards and pioneering innovative strategies.
Connect with Loïc Bourdonnec and the experienced team at LAVA Advisory Partners to unlock the full potential of your M&A initiatives. Get in touch today.
