Successfully navigating an M&A transaction is a seminal moment for any business. The right deal at the right price can supercharge a company’s prospects and for smaller businesses, the transaction may be life-changing for its management and founders.

Getting the right resources in place to manage an M&A deal throughout the cycle is critical. Alongside advisors, an in-house interim M&A professional can be a flexible, cost-effective way to rapidly import transaction expertise – a highly experienced dealmaker who is solely focused on getting the deal done and achieving the best outcome for the company.

Steve Clarke, Partner in Eton Bridge Partners’ Finance Practice specialises in providing interim M&A experts across the transaction process. He spoke to Fiona Kidd – a highly experienced M&A, IPO, and separation/carve-out specialist and programme director with over 20 years’ experience – to explore the role of the interim M&A expert and prospects for the market this year.

Steve Clarke: You’ve worked in and around M&A for most of your career Fiona, what do you enjoy most about it?

Fiona Kidd: The variety and the pace. Every deal is different and presents a myriad of challenges to resolve. Also, deals are often a pivotal moment in the shareholders’ careers and possibly even their lives. Founders may be finally realising the capital from many years of labour, or a management buyout could see the management taking control of their business. It’s exciting, fast-paced work with a clearly defined goal; that’s what attracted me and it’s why I have stayed for so long.

SC: Your engagements have seen you working across a wide range of M&A processes – buy side, sell side, carve out, integration and IPO work. What are the standout qualities needed to deliver in such a wide range of fields?

FK: Fundamentally, it comes down to experience and seeing so many deals from so many angles – buy side/sell side, private equity and corporate, carve out and integration. An IPO is more of a structured process compared to, say, an M&A auction. M&A has more potential to go leftfield or change during the process, for example, as other buyers emerge, prices fluctuate, or funding plans adjust. This requires proactivity and flexibility.

Having done deals for a couple of decades and across multiple sectors, you have the experience of seeing what works and what can go wrong. It arms you with the ability to identify opportunities, anticipate pitfalls, and know what is coming next so you can be proactive. That enables you to keep the deal moving in the right direction and maximise not only the chances of delivering the deal but also of maximising value for the parties concerned.

SC: How would you describe the value-add for using an interim M&A expert alongside other advisors?

FK: In most situations, the benefit is without a doubt that the interim is a specialist who has worked on multiple deals across multiple sectors, often for many years. It is that breadth of experience in a dedicated resource that is very often not identifiable internally. If you try to run the transaction out of the finance department, then many organisations will run into a capacity problem. Unless there is a dedicated M&A team, there will be challenges as the team in-house try to juggle the deal with their day jobs.

When you compare an interim M&A expert with a consultancy, there may be the same level of experience, but generally consultants are not embedded in and working alongside, the in-house team the way an interim is. An interim M&A expert is part of the team and can protect and support the in-house team through the highs and lows of the deal. By being proactive and anticipating the progression of the deal, the interim can insulate the in-house team from the worst of the time and work pressures, particularly for the finance function who are always hit the hardest.

There is also a cost benefit from using an interim M&A expert. Firstly, the interim generally operates for a fraction of the cost of someone with the same level of experience from one of the large consultancies. Secondly, the right interim can manage the external advisers on the deal to maximise efficiency, avoid duplication and ensure activity is cost effective. Having worked on multiple deals and operated on both sides of the fence, an interim M&A expert can spot, and call out, areas of duplication and inefficiency across the teams of advisers. The savings from this alone can pay for the interim’s fee.

SC: What would you say are the most important factors for a business when looking at a transformative transaction?

FK: Strategic fit has to be the number one; without that, the wisdom of the deal must be called into question. Following on from that, it would be getting the valuation and price right and funding it appropriately for the business. Overpaying for an acquisition can hamper the development of the target and put a noose around the neck of the new owner.

It’s crucial to look at the synergies and integration plan early on in the process; that means you can hit the ground running when the deal is done, which is instrumental to ensuring value is maximised. The other key factor is culture. It’s important to ensure that both teams are nurtured through the uncertainty that inevitably results from the transaction.

SC: Transaction levels were down through 2023, what do you think the themes were for the downturn? And do you have a view on factors that may drive M&A activity going into 2024?

FK: I think it really has been an accumulation of multiple factors, which has created a particularly difficult market for doing deals. Uncertainty caused by the war in Ukraine, which followed so closely after the pandemic, together with the rising cost of debt due to inflationary pressures, partly stemming from that war, has resulted in a market where it is harder to fund deals. Transactions have become more expensive to fund and some funding models just don’t work in a time of higher interest rates, especially on the private equity side. Also when there is a change in the market like we have had, it creates a price gap between buyer and seller expectations. Sellers are holding onto higher prices based on historic conditions and it takes some time to realign.

For 2024, there appears to be some optimism that there will be an uptick in M&A, but I am feeling that it’s cautious optimism. Whilst inflationary pressure has eased and interest rates appear to be stabilising, they are still considerably higher than they have been in recent years and that results in the need for some rethinking of deal financial structures.

There is a lot of talk of a huge amount of private equity ‘dry powder,’ and this might be expected to put pressure on private equity firms to seek out deals for investment. This stacks up and would be expected to lead to an uptick in deal activity – what I think remains uncertain is the timing and speed of the increase.

Anecdotal evidence suggests December was a busy month for virtual dataroom providers, this might be an indicator that deal activity is increasing. I don’t feel that the uptick has really happened in the first quarter; It looks like the pick-up is more likely towards the second half of the year.

My sincere thanks to Fiona for joining me for such an insightful conversation.

Eton Bridge Partners’ Finance Practice has a firmly established reputation within the market and has been operating across the full range of leadership positions for more than 13 years.

Can we support you with your interim finance recruitment, or arrange a confidential discussion around your job search?

Please get in touch