Function: Deal Team

Jay Hernandez recently joined the Karma School of Business podcast, sharing his insights into the dynamic world of private equity.

In his discussion with host Sean Mooney, Hernandez, an investment banker focused on industrial technology, talked best practices in mergers and acquisitions.

He emphasized the importance or preparation, understanding buyer psyche and building trust and reputation.

Here are some insights from their conversation.

3 Takeaways from Jay

1. M&A Preparation

Hernandez emphasized the importance of thorough preparation before entering the market. This involves not just understanding one’s own business but also being ready for the intense scrutiny that comes with merger and acquisition processes.

“It’s never too early to prepare for that event,” Hernandez said. “You always have to be prepared.”

Mooney agreed: “The more you do that, the more luck you tend to have in business and life, but also M&A processes.”

READ MORE: Why Mergers and Acquisitions Fail

Hernandez also stressed the importance of talking to key players early in the process.

“Engage your advisors, engage your experts well in advance. And it could be even a year or two in advance,” Hernandez said.

Mooney said that doing so can ensure that all aspects of the business are aligned and ready for the sale process.

“You should probably be talking with an investment banker right now so that when that light is green, you’re getting an early start,” he said.

2. Understanding Buyer Psyche

Hernandez also pointed out the increased depth and detail in buyers’ inquiries within M&As.

“The psyche of the participants has changed, and particularly on the buyers, and where that’s changed a lot is the areas that they’re digging into and the depth of which they’re digging into,” he said.

Mooney underscored the need for sellers to understand and anticipate the buyer’s perspective. He highlighted the diligence PE firms conduct in preparing for M&A processes.

“Private equity firms are spending more time making sure things are absolutely buttoned up so that they’re prepared to move as quickly as possible through an M&A process,” he said.

READ MORE: Merger Planning & Integration: Best Practices for Private Equity Firms

3. Building Trust and Reputation

Finally, Hernandez emphasized the necessity for buyers to maintain integrity and straightforwardness during the M&A process.

“You need to make sure that you’re doing it right for the company that you’re looking at, because at the same time, you’re going to be their partner going forward,” he said.

Mooney cautioned about the fragility of reputation.

“It takes a lifetime to build a reputation and literally 30 seconds to ruin it,” he said.

Hernandez added that “99.999 percent of the groups that we deal with and the buyers that we deal with are straight shooters and do exactly what they’re going to say.”

READ MORE: Post-Merger Integration: Framework, Keys to Success

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Hernandez’s entire conversation with Mooney offers unique insight into the world of mergers and acquisitions from an investment banking perspective. (Stay tuned until the end for a time- and stress-saving life hack about cooking the perfect steak.)

When you’re done listening, head to the main BluWave podcast page for more conversations with business leaders.