5 tips for fintech entrepreneurs on M&A
What can the characteristics of 5 famous people teach fintech entrepreneurs?
26 June, 2018
Developing your story, listing your demands, sticking to your destination with an open mind and building your case are all part of the package when you're considering an M&A transaction.
This article explores how you should approach an M&A from start to finish from the characteristics of five famous people.
J K Rowling: Develop your story from the beginning
The story of how you built the business will be as important as its financial value to a buyer. From the beginning, choose your characters, make clear choices and learn from mistakes. It’s important to maintain and develop the culture through a careful team selection. Build a team that you trust and believe in your vision. Don’t let a Slytherin into Gryffindor and move people on if they don’t work out. As Emanuel Andjelic, co-founder of personal finance platform Squirrel, says: “Our success is a direct result of the people we’ve pulled together to build the product.”
You will have lots of customers who will demand everything. It’s a mistake to try and please everyone. Instead, focus on one or two key customers who share your vision, collaborate and build a successful case study. Establish a good relationship with the regulators. Even if you are not heavily regulated, your customers are likely to be.
Mariah Carey: List your demands
You may be approached by several buyers or investors, and the temptation to sell to the highest bidder can be overwhelming. However, timing and ‘fit’ is essential. List your demands and stick to the vision. This could be protecting key people, cultural identity, values or intellectual property. Shortlist buyers and investors who share your vision, can meet your demands and can help you get to your destination. It takes time to build trust, so don’t expect investors open-up from day one.
Ben Ainslie: Stick to your destination, but be flexible on the journey
Running a fintech startup is like sailing into the wind. Frequent course changes may mean you will reach your destination faster. Stick to your vision, but keep an open-mind to new possibilities. Consider Mercedes and Swatch. The synergy from their seemingly unlikely joint venture saw the creation of the SMART car. Think big and listen to what added-value buyers can offer. This will also help you understand what the right price is.
Noel Edmonds: Deal or no deal
Take a moment to understand whether the offer is what your company is realistically worth to you – against what it is worth to the buyer. These can be substantially different. Understand their position, how you are able to benefit and the synergies on offer. If your business is generating an operating profit of £2 million, you may value it at £20 million. To the buyer, it could be worth £200 million.
Erin Brockovich: Build your case
Be prepared for the intense scrutiny from buyers and their teams. Your financials have to make sense. Avoid inflated projections and make sure nothing is missing. Appoint someone to help you professionalise the transaction. Evidence your success through case studies. Demonstrate you have a strong plan. Ensure your management team are aligned, telling the same story and vision.