The M&A Detective: Unraveling the Mysteries of a Business

Over the years, the role of an M&A advisor has been given many titles—broker, investment banker, business broker, and more. But as I sat watching the latest episode of Matlock the other night, a realization struck me: we are more akin to detectives than anything else. Could it be that all these years, when I introduced myself to new acquaintances and explained what I did for a living, I should have simply said, “I’m an M&A Detective”? The more I think about it, the more it rings true. Allow me to explain.

The Financial Spaghetti Maze

Time and time again, I come across financial records that are an absolute disaster. It’s not for lack of effort—many business owners have hired bookkeepers, controllers, and even Chief Financial Officers (CFOs) to manage the numbers. Yet, despite these efforts, the financials often resemble a crime scene, requiring deep forensic investigation to piece together what’s really going on.

Some owners operate under the illusion that purchasing a QuickBooks license magically grants them expertise in accounting. The reality, however, is a tangled web of misallocated expenses, questionable inter-company transactions, and a frequent blurring of personal and business finances. These chaotic books turn my role into that of a sleuth, searching for clarity amidst the confusion. Every transaction is a clue, every discrepancy a potential red flag, and every missing piece an enigma waiting to be solved.

Operational Chaos: A Case of Organized Disorder

If there’s one truth in the world of mergers and acquisitions, it’s this: many businesses thrive despite themselves. Organizational structures range from the hilariously convoluted—resembling a spirograph gone rogue—to the painfully simplistic, where every decision flows in a direct line to the owner, bottlenecking progress.

In many cases, businesses operate with little to no standardized systems, leaving employees to rely on institutional knowledge that vanishes the moment key personnel leave. Even more concerning is the widespread lack of awareness about which customers contribute to profitability and which ones merely drain resources. I’ve encountered companies clinging to unprofitable clients like a detective chasing a red herring, never realizing that these low-margin deals are sabotaging their own bottom line.

The Quest for Hidden Value

At the heart of our work as M&A Detectives is the relentless pursuit of hidden value. Like any good investigator, we sift through the noise, uncover the golden nuggets of opportunity, and frame them in a compelling way that buyers can grasp and appreciate. This is not a job for the faint of heart—it requires patience, persistence, and an insatiable curiosity for discovering what others might overlook.

The process often leads us down numerous rabbit holes, each one filled with unexpected twists and turns. No two cases are ever the same, and that’s what makes this work so exhilarating. But one thing remains constant: businesses that proactively prepare for sale fare far better than those that scramble at the last minute.

A Word to Business Owners: The Time to Prepare is Now

My advice to business owners is simple—don’t wait until you’re ready to sell to start organizing your financials and operations. If your exit plan is five years away, the time to act is now. Cleaning up your books, refining your operational structure, and identifying the true drivers of profitability will make all the difference when the time comes to negotiate with buyers.

If you find yourself wondering what steps you should take before it’s too late, give us a call. We’re not just M&A advisors, we’re M&A Detectives, ready to crack the case and position your business for maximum value. The investigation begins now.

Steven Pappas, M&A MI
Partner, Managing Director
Touchstone Advisors
860-669-2246
spappas@touchstoneadvisors.com

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