Six steps that empower the buy-side for a successful negotiation

One of a company's expansion strategies may involve the acquisition of other companies or mergers. A move that involves two sides – that of organizations willing to buy (buy-side) and that of those presented in the market to be sold (sell-side). For both parties, planning and methodology are necessary.

Particularly for the buy-side, as it is the side seeking this growth in its operations. According to business consultant Leonardo Grisotto, co-founder and managing partner of Zaxo, an M&A (Mergers and Acquisitions) boutique specialized in providing customized advisory services to both sides of the process, the decision to go to the market to buy requires rigor in certain procedures.

The expert summarizes these measures in a checklist. “These are steps that, if properly observed and followed, empower the buy-side for a successful negotiation,” he states. Below are the points highlighted by the consultant:

1 – Market research, to assess conjunctural conditions, projections, and perspectives;

2 – Opportunity mapping, to identify the one that best meets the purposes and specificities of the buy-side;

3 – Strategic analysis: it is not enough to just map and identify. A strategic analysis is necessary, both internal and external (conjuncture, market, and the other side, i.e., the sell-side, of businesses open to sale);

3 – Framework, an important element of strategic analysis, but with a more specific focus on a particular aspect of the process;

4 – Negotiation execution, to ensure it is a win-win relationship M&A process, meaning advantageous for both parties and healthy for the market;

5 – An integration plan for the post-buy (post-merger or acquisition). This includes everything from integrating the teams and employees of the involved organizations to systems and procedures.

According to Grisotto, each of these stages is of decisive importance. But he draws special attention to PMI (Post Merger Integration, i.e., integration after the acquisition). “The integration between the organization that bought and the one that was sold is often the most delicate, most critical point. Not always are corporations and people prepared to carry out this integration,” he notes.

The Zaxo expert explains that the term buy-side is used in the financial market, referring to the buyer/investor side, such as actual investment funds, insurance companies, pension funds, asset managers, and of course, medium and large companies. However, he emphasizes, it also applies to medium and large companies interested in mergers and acquisitions. “The M&A process requires methodology for both sides, the buy-side and the sell-side,” he reiterates.

In Grisotto’s assessment, although the global scenario is impacted by ongoing military conflicts (in the Middle East and the Russia versus Ukraine war), the mergers and acquisitions market remains heated. Corporations, mainly from the United States and China, are making purchases in various countries, of local companies, across the most varied economic activities.

In Brazil, internally, analyses also indicate a movement of mergers and acquisitions. Just in the first month of the year, at least 85 of them were mapped by PwC Brazil. In a report released in March, the consultancy announced that in 2024, mergers and acquisitions in the country are expected to grow compared to 2023.