If you work in a PE firm, would you agree that it’s a day job to find companies to buy, and buying them? I mean, why else would you have Deals teams? Then why do some PE firms expect the leaders of their portfolio companies to do M&A as a side hustle of their day job? And why are these same leaders of portfolio companies OK with that? Portfolio company M&A is mostly a series of tuck-ins. Transactions are small, yet each is a large project to manage in its own right. Welcome to M&A Small Deal Hell.

Enter the Hot Potato

The hot potato arrives in the form of an accepted LOI. I’ve seen various flavors of the potato getting passed from executive to executive. It sounds like this:

CEO: I can’t take on the M&A. I have a business to run.

CFO: I can’t take on the M&A. My team does not have the bandwidth. We need to focus on month end. 

COO: I can’t take on the M&A. I need to keep the lights on. Give it to me once it’s been absorbed. 

Operating Partner: I can’t take on the M&A, I don’t have the resources.

So the potato gets passed to the PE owner, because they know M&A.

At that point, the hot potato sometimes gets palmed back to the portfolio company leaders to figure out. And it becomes a side hustle to the leaders’ day job. Predictable results can include sub-par integration and synergies. 

Or it sometimes gets handed over to a PE Deals Associate to run with. And that’s fine, except now there’s one less resource in the Deals teams focused on the next platform acquisition.

“Welcome to M&A Small Deal Hell”, as a client christened it. 

Small Deal Hell sucks. 

Thankfully, it’s remarkably easy to avoid.

M&A

Just.build.M&A.muscle.

So, how do you build M&A muscle?

First up, People. If you want to do M&A, hire an M&A leader who gets M&A. Someone who has done it before, and brings a battle-tested playbook. If you’re serious about M&A, hire an M&A team. A well-run M&A team can do a lot of damage. A couple of clients have set up absolute war machines.

Next, Process. M&A, like Sales and Marketing, runs on predictable, repeatable motions. Motions are codified in a playbook. Hire your M&A leader at least 3 months before you’re ready to pounce, to give them time to set up the governance and processes your M&A machine needs. 

Finally, Technology. If you’re new to the M&A game, a well-structured Excel workbook goes a long way. If you’re a serial acquirer, there are great SaaS tools. The key is to have a tech stack that automates your processes and grows with your needs.

If you’re serious about inorganic growth for your portfolio company, building your M&A muscle isn’t a nice-to-have. It’s a must-have. And you can’t be half assed about it.

You can find more M&A insights here and subscribe to ASTERI+ our newsletter to never miss an article Linkedin to be sure to .