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Dealmaking advisers can offer much more value to the companies they serve when they’re brought in early, even before a deal is on the table, says Tom Haught, president of Sequoia Financial Group.

“Establish those relationships before you get into the battle of the deal,” Haught says. “The longer you’ve had to build those relationships with your advisers, the better they understand what you’re trying to accomplish. You can make a more informed decision.”

Advance planning is a valuable tool for any action your business takes, no matter how experienced you think you may be, says Randy Myeroff, CEO of Cohen & Co. "A mistake people make is thinking you get beyond a point where you really need a plan,” Myeroff says.

Haught and Myeroff have a strong relationship built through Sequoia’s role as Cohen & Co.’s preferred financial services provider.

In this Dealmaker Q&A, we ask Haught and Myeroff about both the value provided and the risks that need to be considered when planning for M&A activity. 

What are some tips on how best to use your M&A advisory team?

Haught: Many times, there are consultants that just work with the business, and consultants — be it financial advisers or attorneys — that just work with the individual. Getting that team together to collaborate would be a best practice. Along those lines, it’s also important to integrate your corporate and your personal plan. If you have them both up to date, then you can make good decisions about whether a deal is right for the business, as well as how it will impact your personal plan. But if you don't keep them both up to date, you don't integrate them and you don't take time to step back and understand your overall plan, you can get yourself in a bit of a predicament.

Myeroff: Keep your advisers grounded. Your advisers may be experts in what they do, but they're also human and they have emotions, particularly if they've been with you for a long time. We've seen plenty of cases where advisers have put a client in a difficult position because a client will be looking at a deal to sell their business, for instance. It seems to make sense, it seems to be reasonable, it seems to fit in terms of personal objectives, as well as corporate.

I've seen advisors emotionally say, ‘You know, you're not getting enough. Are you sure you want to do this?’ It's easy as an outsider, as an adviser, to think, ‘Well, that's what I should be doing. I should be challenging my client and making sure they're getting everything they should. That's my job.’ But we've seen some really bad results where clients thought they had a good, solid plan they thought they were executing. Your plan will keep your advisers grounded and focused and representing your interests as well. Good advisers do challenge you and they do need to make sure that your plan is solid. But that's different than getting too emotional.

So much is changing across all aspects of business. Does this include the principles of dealmaking?

Haught: Strategic planning is timeless. The idea that you're developing a plan, both the personal financial plan and the corporate plan and integrating those and doing that long in advance, is staying the same. The tactics are ever-changing. The tax structure associated with deals, the cost of capital, the access to capital, the sources of capital, the pace with which M&A is happening in our industry, that's ever-changing. But the strategy of having a good long-term plan, taking time away from the business to work on the business rather than working in the business and integrating your personal plan and your corporate plan, that is not changing.

Myeroff: If you feel like, ‘Boy, I think I could really build my business over the next five to 10 years by acquisition,’ you think that based on a set of facts that exist today that are absolutely going to change. You may feel today access to capital is great or that you’ve got the right talent and leadership in place or the demographics of the companies you could buy are favorable. As you coordinate these things, you need to understand that it's not a continuum where you can make certain decisions when you choose to.

If you decide it's just not time, you may have to recognize that the next opportunity could be four or five years away. You could get into a down cycle where you won't be able to achieve your objectives and you've got to hold on for a while. You do have to recognize that that you're building a plane while you're flying it. You're in a constantly moving environment that may not be as favorable to you as you would hope it would be when you make your decisions.