The Value of Intangibles in Mergers & Acquisitions

Explore Expert Insights into M&A Strategies with Andrew Sherman in This Enlightening Podcast Episode

In the latest episode of "How the Deal Was Done," 29Bison CEO Laura Queen delves into the often overlooked yet crucial aspect of mergers and acquisitions: intangible assets with Andrew Sherman. Sherman, a seasoned attorney, professor and author with over 40 years of experience, emphasizes that many sellers leave substantial value on the table by not identifying and articulating their intangible assets. From intellectual property to brand reputation, these assets can significantly impact the valuation of a company. Sherman uses a compelling analogy, comparing hidden intangible assets to gold bars in an attic—valuable treasures that sellers often overlook. He advises sellers to conduct a pre-sale strategic IP audit to uncover these hidden assets and maximize their company's value.

Impact of Company Culture on Valuation

Another key point discussed in the podcast is the profound impact of company culture on business valuation. Sherman asserts that people are the "tippy, tippy, tippy top" of any organization, driving innovation, creativity, and financial performance. He highlights how companies like Microsoft, which acquired LinkedIn for $25 billion, recognized the immense value of intangible assets such as culture and leadership. In a post-pandemic world where remote work has become the norm, assessing company culture has become more challenging yet more critical. Sellers need to demonstrate that their virtual teams maintain high levels of collaboration and engagement to attract potential buyers.

Navigating M&A in a Post-Pandemic World

The COVID-19 pandemic has reshaped many aspects of business, including M&A strategies. Sherman discusses how the shift to remote work has made it harder to assess intangible assets like company culture and employee engagement. He stresses the importance of sellers articulating their strengths in these areas, even in a virtual setting. Additionally, Sherman touches on the evolving landscape of technology and AI in business valuations. He notes that while AI can enhance business value, an over-reliance on technology can also be a risk factor. Sellers must find a balance to ensure that technology investments are value enhancers rather than diluters.

Key Takeaways for Buyers and Sellers

The podcast concludes with actionable insights for both buyers and sellers in the M&A market. For sellers, Sherman advises knowing your business inside out and involving a diverse team in the strategic IP audit process. Understanding and articulating your intangible assets can significantly boost your company's valuation. For buyers, he recommends looking beyond traditional financial metrics and considering the totality of a company's assets, both tangible and intangible. Effective due diligence involves identifying hidden pockets of value that the seller may not recognize. By doing so, buyers can make more informed decisions and potentially secure better deals.

Tune in to this enlightening episode of "How the Deal Was Done" to gain valuable insights from Andrew Sherman on navigating the complexities of M&A. Whether you're on the buy-side or sell-side, this episode offers practical advice to help you maximize value and make informed decisions. Listen to the full episode on Spotify or Apple Podcasts.

Why  29Bison?

Choosing the right partner for HR due diligence and integration is critical to the success of any transaction, and 29Bison offers unmatched expertise and support in navigating these complexities. With a people-first approach, we go beyond traditional due diligence to address not only workforce-related risks but also opportunities that drive long-term value creation. Our comprehensive HR due diligence services uncover hidden risks, optimize workforce strategies, and identify synergies that align with your strategic objectives. Post-transaction, we provide tailored HR integration solutions designed to foster a seamless transition, retain key talent, and build a cohesive organizational culture that supports sustainable growth.  And finally, 29Bison’s Fractional HR Operating Partner service provides private equity firms with strategic, high-impact HR leadership, driving value creation, talent optimization, and seamless workforce integration across portfolio companies,

At 29Bison, we’re more than human capital consultants—we’re partners invested in helping you achieve your vision by maximizing the potential of your most valuable asset: your people. Let us help you turn challenges into opportunities and create a solid foundation for success. Reach out today to learn how we can support your HR diligence and integration needs.