One of the biggest misconceptions we see among sellers in aerospace and defense (A&D) transactions is the idea of a “perfect buyer.” It is impossible to know which buyer will pay the highest price and offer the best terms for your company without running a sale process and asking all of the likely buyers.
In Deal Note® 138 (Who Are The Best Buyers?), we discussed the difference between strategic buyers and financial buyers and what each group looks for. Both groups have different motivations, deal structures, and risk tolerances. While it is challenging to find a buyer who will check every box – the highest price, best cultural fit, and fastest close – a structured process will certainly reveal the best buyer in the market at the time of sale.
Instead of having tunnel vision on a single buyer, sellers should focus on:
- Maximizing Competitive Interest – A strong investment banker will bring about a structured sale process with multiple bidders, driving better outcomes.
- Understanding Trade-Offs – Figure out what matters most to you – price, speed, structure, or post-sale involvement and prioritize accordingly.
- Being Prepared – Being prepared will actually give way for higher bids from sophisticated buyers. Buyers will scrutinize every aspect of a business during due diligence before making an acquisition. By being proactive in upfront due diligence, sellers can provide support for their financial projections and give buyers confidence when presenting the deal to their investment committees – ultimately driving stronger, more competitive offers.
Selecting an experienced M&A banker will set the stage for finding the best buyer in the current market. The strongest exits come from a seller focusing on the three bullet points stated above rather than on who the one perfect buyer may be.
Have a great day everyone,
Max McFarland
Associate
