Transaction Readiness
A Key to Growth, Capital Efficiency, & Valuation
Keys To Maximizing Value
- Tech companies are bought-not sold
- You need to be ready when the Buyer “comes a courting”
- Strong diligence enhances seller leverage
- Capital efficiency most important to investors 2025
Buyers Really Care
- Buyer’s SWAT team descends on every aspect of business while Seller attempts to conduct business as usual
- Seller management scrambles to meet Due Diligence requests
- Battle tested, multiple deals in a month, large checklists
- Seller management scrambles to meet Due Diligence requests
- Mismatch of Buyer’s Due Diligence teams and Seller’s resources
- M&A process & execution are core competency for Buyers
- Large teams of dedicated experts
- Strategy, Finance & Operations, Legal, HR, IT
- Buyers will make own assessment of the health and hygiene of your business
- If Buyer passes, you may never know exactly what turned them off
- Buyers back away from >50% of deals during due diligence
Deadly Sin #1
Lack of Validation of Benefit to the Buyer
Validation of benefit to the Buyer
- Can you provide the evidence to support the Buyer’s business case to purchase your Company?
- Will your customers validate the value when called by Buyer…do you know what they will say?
- Is your team aligned on articulating value proposition to Buyer?
Deal Impact
- This is the first and most important hurdle
- If cannot validate business case at start, the Deal Team will report back to Business Owner that there is no “there-there”
- High probability of a Deal Killer-no second chance
Deadly Sin #2
Lack of Strategy
Due Diligence Questions
- Market Strategy
- Growth Drivers & Sizing
- Competitive Landscape
- Product
- Technology
- Customers
- Sales
- Growth & Product
- Financial Overview
- Capital Efficiency
Deal Impact
Strong business case with Buyer/Investor
- Pitch Deck that nails it
- Coherent 3 YR Strategic Roadmap with Management Alignment
- Operating Plan. Assumptions challenged & In-Sync with item 2
Deadly Sin #3
Lack of Capital Efficiency
Due Diligence Questions
- Sales Efficiency
- CAC Payback
- Upgrade Path
- Expansion Motion
- Customer Retention
- Net Retention
- Pricing
- Gross Margin
- Incorrect or insufficient resource allocation
- Incentives
- Compute Spend Mgmt
- Revenue per Headcount
- Burn Multiple
Deal Impact
- Capital Efficiency is most important to Buyer/Investor in 2025
- Operating in the “Rule of 40” and “1.5X EBITDA to 1.0X revenue” zone
Deadly Sin #4
Lack of Business Operationalization
Dynamics
- Standardization in place
- Math in place to assess performance and course correct
- Forecasting Rigor
- Operating Drills
- Streamline & Automate. “Act 30/30” Principle, save waste by 30% in a process and use it to increase revenue by 30%
- Organization. “80/20” Principle, each 80 for a project needs to have a qualified 20 to ensure the project is delivered
- “3 X 20” Principle. Have 3 options to achieve the goal
Impact
- Lack of Alignment to the Strategic Plan.
- Loss of focus and direction leading to confusion, wasted resources, increased risk, and negative impact on bottom line
- Deliver a cohesive financial plan that matches and supports the strategic plan, having challenged and validated assumptions
Other Deadly Sins
Deadly Sin
- Failure to Show Ownership of Intellectual Property
- Are there potential lawsuits or litigation that may surface during due diligence or once Deal is announced?
- Quality of accounting and forecasts.
- Do any of your agreements have non-standard terms (exclusivity, termination rights) that could impact the value to Buyer?
Deal Impact
- Going back to gain “permissions” or to remediate 3rd party code can be time consuming-often a Condition to Closing
- Unresolved claims will REDUCE Deal Value, either at Close or from Escrow
- Identified exposures will directly REDUCE the Deal Value
- Non-assignment or cancellation of customer contracts can reduce future revenue and reduce the value of the Deal
Transaction Readiness Services Phase 1
- Phase 1. Risk Assessment: A Holistic Strategy | Financial | Operational Review
Assesses M&A risk factors. Identify gaps in strategy, capital efficiency, and bottlenecks across teams, workflows, and systems. Recommend a course of remedial action Transaction Readiness Services
- Interviews: CEO, CRO, VP Product, CTO, CFO, FP&A etc.
- Analytics: Lakeview Advisors internal analytics
- Summary Report: Identify areas for improvement in your transaction readiness, strategic/financial plan, Org structure, financial, and operational frameworks
- Recommended Action Plan: Recommended remedial actions
Transaction Readiness Questionnaire
Transaction Readiness Services Phase 2
Phase 2. Lead/Oversee the specific implementation of the recommended remedial actions.
- The Lakeview Advisors team will supplement your FP&A/SWAT team
- Perform the specific implementation of the recommended remedial actions
- Strategic Planning Session with deep dives in the risk areas
- Implement initiatives to optimize internal financial/operational processes, Org structure, drills, workflows, automation to drive efficiencies and operational reliability
