How to Close Deals in 30 Days

When it comes to M&A, time is of the essence. As a buyer, it’s best to identify whether to pursue the deal or not as soon as possible, to avoid wasting money and time. Also, if the seller is a good target company, procrastinating could lead to more competition. In this article, Jeremy Segal, Executive Vice President Corporate Development at Progress, shares their strategy on how to close deals in 30 days.

“No matter how much diligence you do, there's always going to be surprises. So what's important in diligence is to really focus on key things that could potentially influence your decision to do or not to do a deal.” - Jeremy Segal 

Initial conversations with the target company

Initial conversations should look like a dating process. It’s a chance to get to know the target company, but also giving them an opportunity to get to you as the buyer. It’s about building trust and understanding of both the companies, until it gets to the point where they will realize it does make sense to do M&A. 

The key to closing a deal in 30 days is a comprehensive preliminary due diligence list that should give buyers a clear understanding of the target company, and whether or not to proceed with the acquisition.

Preliminary due diligence list

When creating an effective preliminary due diligence list, avoid asking questions that can be answered by a  'yes,’ or ‘no’ ; it provides no value. Frame the question in such a way that they have to explain how they approach it, how they differentiate in an area, and you can learn a lot more about the company.

Furthermore, it has to be aligned with the overall strategy and deal rationale. For progress, their main goal for their acquisition is operational efficiency. Hence, their preliminary due diligence list focuses on capital expenditure, operational expenses, and sales and go-to-market.  

Preliminary due diligence request list should also vary depending on the deal thesis. Every deal is different, and there must be deal specific adjustments on the list. 

Front Load all the important questions pre LOI. If buyers wish to proceed, submit an LOI and gain exclusivity to ensure you are the only party negotiating. Avoid committing significant time to diligence a company if there are five other companies also bidding on that target. It requires a lot of work and external resources, only to potentially lose the deal.

Confirmatory due diligence

At this stage, do not aspire for 100% accuracy. There will always be surprises in M&A regardless of how much diligence is done. What's important in diligence is to focus on the key things that could potentially influence your decision to do or not do a deal. 

While performing the confirmatory due diligence, start negotiations. This way, when there are no significant findings, there is already a negotiated definitive agreement. 

However, delays are always possible, depending on the seller's readiness. So when negotiating the LOI, request for 30 days exclusivity with automatic extensions, as long as parties continue to negotiate in good faith.