All-in-One Vendor Relationship: How to Choose a Preferred Partner for Your Next Transaction

Ready for the understatement of the year? Mergers and acquisitions can get really complicated really fast. Think of something between solving a Rubik’s Cube blindfolded and decoding the Matrix.

You’re dealing with so many moving parts, questions and considerations—not all of them obvious. That’s why who you bring to the table with you matters so much.

You could spend a small fortune (and insane amounts of time) cobbling together a team capable of covering all the different angles, from financial due diligence to cybersecurity to people management. Or you could make things easier by finding a Swiss Army partner that does it all.

Having an all-in-one preferred partner lets you bypass the hassles and delays of discrete scoping, separate NDAs, RFPs, processing, the whole nine yards. In a world where time kills all deals, this type of speed is a lifesaver.

That begs the question, what should you look for in a transaction partner?

Here at Sikich, we’re suckers for a good checklist. So we put one together to help you evaluate potential partners based on their expertise in multiple areas.

√ Conducting Thorough Financial Due Diligence

File this one in the “obvious” category, but there are plenty of not-so-obvious components beyond basic financial reports. For example, to get (or give) an accurate financial performance of a company, you’ll want a Quality of Earnings report. We’ve written numerous articles on this topic, like this one and also this one. In a nutshell, going through the QofE process with an expert helps you see “through” the numbers of your standard financial reporting.

The QofE also reveals the sustainability and accuracy of a company’s historical earnings and achievability of future projections. It accounts for any outliers and one-offs (we’re looking at you, COVID-19). In other words, you can see if anything has been done to artificially inflate a target company’s worth.

√ Performing Meticulous Tax Diligence

Your partner could assist with tax due diligence as well as help you identify compliance tax risks regarding income tax, payroll tax and sales tax laws, to name a few.

Further, your partner should scrutinize the details of your tax structure to get you the most advantageous results. Is the target business a C-corp, S-corp or partnership? Are there IP or contracts to transfer if it’s an asset sale? You’ll want all the answers.

√ Uncovering Potential Security Issues

Having an advisor who understands the bits and bytes of the IT landscape as well as they do the dollars and cents will prove invaluable to your transactions.

These days, IT due diligence should be every bit as rigorous as the financial—covering everything from the organizational structure and the staff to your tech strategy, disaster-recovery plans, data privacy, compliance and more.

Before putting any pen to paper, you need a clear vision of the seller’s network posture and security risks—both cyber and physical. Where are all the remote access points? How are the firewalls configured? How vulnerable are, say, entry-level staff—or vendors that have access?

Find a partner capable of doing the dirty work, like penetration testing with trained professionals. Mere testing software and bots can’t behave the same way a live attacker would, whether that’s a teenager down the street or threat actors across the globe. The time to learn about any potential for breaches, liabilities and losses is before you close the deal.

√ Gaining Technology Insights

How’s this for efficiency: Your advisor’s IT due diligence uncovers some security issues that need attention. Instead of shopping for vendors to right all the wrongs, they pass the work along seamlessly to their colleagues.

Having that capacity all lined up means you can quickly take action on risk mitigation and remediation. At a minimum, you’ll know any extra costs involved for doing so, which you can then factor into negotiations. The same goes for upgrading mission-critical enterprise systems, cloud migration plans and personnel.

In the best case scenario, your preferred provider could have its own managed services group to step in as your virtual CIO or outsourced tech department, which cuts down on overhead.

√ Managing the People Element

We’ve talked about considerations around the financials and the big picture for technology. Now comes the human factor. Find an advisor who understands how and why to assess the intricate details of a target company’s management. This includes their salaries, responsibilities and so much more. You’ll want a good grasp on employee handbooks, policies, formal complaints, investigations and audits as well as existing employment agreements to identify potential red flags.

Whether the seller is riding off into the sunset of retirement or looking to add additional leadership to the team, having an advisor that can assist with an executive search is a huge bonus.

√ Raising Brand Awareness

Inside every transaction, there’s a golden yet underutilized opportunity to raise brand awareness. From transaction-related communications (e.g., news releases and social media posts) to thought leadership content (e.g., blogs and articles in industry media), sustained marketing communications efforts can help private equity firms showcase their expertise and increase visibility among key audiences.

By working with a transaction advisor with in-house marketing capabilities, a private equity firm can make the most of each transaction, actively manage its reputation and promote its unique value proposition. In the end, sustained marketing communications promotion can help a firm do what’s most important: increase deal flow.

Sikich checks all the boxes

When you get the full range of critical transaction services from a single preferred partner, you set yourself up for transaction success, speed and simplicity.

Your partner can easily share institutional knowledge and make sure no details fall through the cracks. Meanwhile, you have only one contact—and it’s one you can trust.

The transaction advisory experts at Sikich check all the boxes of a preferred provider, and many more. Contact us today to find out why we’re the only advisor you need.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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