ma-playbook · v2.0.0 · 2026-03-09 · sha256 2cc71f8035e71b71
ma-playbook v2.0.0A
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---
name: ma-playbook
description: >
M&A strategy for acquiring companies or being acquired. Covers strategic rationale
assessment, target screening, due diligence frameworks, valuation methodologies,
deal structure, negotiation strategy, integration planning, and post-acquisition
execution. Use when evaluating acquisitions, preparing to be acquired, conducting
due diligence, planning integration, negotiating deal terms, or when user mentions
M&A, acquisition, merger, acqui-hire, due diligence, valuation, LOI, earnout,
integration, or deal structure.
license: MIT + Commons Clause
metadata:
version: 2.0.0
author: borghei
category: c-level
domain: ma-strategy
updated: 2026-03-09
frameworks:
- acquisition-playbook
- due-diligence-framework
- valuation-methods
- integration-100-day
- being-acquired-playbook
- deal-structure
triggers:
- M&A
- merger
- acquisition
- acquire
- acqui-hire
- due diligence
- valuation
- LOI
- letter of intent
- term sheet
- earnout
- integration
- deal structure
- buy a company
- being acquired
- selling the company
- exit strategy
- data room
cross-references:
- c-level-advisor/ceo-advisor
- c-level-advisor/cfo-advisor
- c-level-advisor/cto-advisor
- c-level-advisor/chro-advisor
- c-level-advisor/coo-advisor
- c-level-advisor/cpo-advisor
- c-level-advisor/ciso-advisor
- c-level-advisor/culture-architect
---
# M&A Playbook
Frameworks for both sides of M&A: acquiring companies and being acquired. Every M&A decision starts with strategic rationale -- without it, you are buying problems.
## Keywords
M&A, mergers and acquisitions, due diligence, acquisition, acqui-hire, integration, deal structure, valuation, LOI, term sheet, earnout, data room, strategic rationale, post-merger integration, buyer, seller, exit
---
## Acquiring: Decision Framework
### Strategic Rationale Decision Tree
```
START: Acquisition opportunity identified
|
v
[What are you really buying?]
|
+-- TALENT (acqui-hire)
| Cost: $1-3M per key engineer
| Timeline: 1-3 months
| Risk: Key people leave after lockup
|
+-- TECHNOLOGY (product/IP)
| Cost: Revenue multiple or technology valuation
| Timeline: 3-6 months
| Risk: Technology doesn't integrate, team leaves
|
+-- CUSTOMERS (market share)
| Cost: Revenue multiple (higher for sticky customers)
| Timeline: 3-6 months
| Risk: Customers churn during transition
|
+-- MARKET ACCESS (geographic or vertical)
Cost: Strategic premium
Timeline: 6-12 months
Risk: Market assumptions wrong, cultural clash
For ALL types, ask:
"Can we build this faster and cheaper?" If YES --> Don't acquire.
"Is integration complexity worth the shortcut?" If NO --> Don't acquire.
```
### Buy vs. Build Analysis
| Factor | Buy | Build |
|--------|-----|-------|
| Time to market | Fast (months) | Slow (years) |
| Cost | Higher upfront, uncertain total | Lower upfront, predictable |
| Risk | Integration risk, culture clash, key person departure | Execution risk, market timing |
| Control | Lower (inheriting systems and culture) | Higher (building from scratch) |
| Team | Get experienced team immediately | Build team to your culture |
**Decision rule**: Buy when time-to-market matters more than cost. Build when control and culture matter more than speed.
---
## Due Diligence Framework
### Due Diligence by Domain
| Domain | Key Questions | Red Flags | Owner |
|--------|--------------|-----------|-------|
| **Financial** | Revenue quality? Customer concentration? Burn rate? Deferred revenue? | > 30% from 1 customer; declining margins; hidden liabilities | CFO |
| **Technical** | Code quality? Tech debt? Architecture fit? Security posture? | Monolith with no tests; no CI/CD; critical security gaps | CTO |
| **Legal** | IP ownership? Pending litigation? Contract assignability? | Key IP owned by individuals; active lawsuits; non-assignable contracts | Legal counsel |
| **People** | Key person risk? Culture fit? Retention likelihood? | Founders with no lockup; team wants to leave; culture mismatch | CHRO |
| **Market** | Market position? Competitive threats? Customer satisfaction? | Declining market share; commoditizing market; low NPS | CEO/CPO |
| **Customers** | Churn rate? NPS? Contract terms? Expansion potential? | High churn; short contracts; declining usage | CRO/CPO |
| **Product** | PMF evidence? Roadmap alignment? Technical overlap? | No retention data; divergent roadmap; redundant technology | CPO |
| **Security** | Compliance status? Incident history? Data practices? | No SOC 2; history of breaches; poor data handling | CISO |
### Due Diligence Priority Matrix
| Priority | Items | Timeline |
|----------|-------|----------|
| 1 (Deal-breaker) | Financial accuracy, IP ownership, litigation, key person risk | Week 1-2 |
| 2 (Valuation impact) | Revenue quality, churn, tech debt, customer concentration | Week 2-4 |
| 3 (Integration planning) | Culture assessment, technical architecture, process overlap | Week 3-6 |
| 4 (Post-close optimization) | Operational efficiency, vendor contracts, tool consolidation | Week 4-8 |
### Financial Due Diligence Deep Dive
| Metric | What to Verify | Red Flag |
|--------|---------------|----------|
| Revenue recognition | Is revenue recognized properly? Deferred revenue accurate? | Aggressive recognition inflating ARR |
| Customer quality | Weighted average contract length and renewal rate | Short contracts, declining renewals |
| Cohort retention | Do older cohorts retain better or worse? | Worsening retention in newer cohorts |
| Burn rate | All-in cost including one-time items | Hidden costs, one-time items excluded |
| Cash position | Verified bank statements | Discrepancy between reported and actual |
| Liability inventory | All known and contingent liabilities | Undisclosed or underestimated liabilities |
---
## Valuation Methods
### Method Selection
| Method | When to Use | Pros | Cons |
|--------|------------|------|------|
| Revenue multiple | SaaS with growth | Simple, comparable | Ignores profitability |
| ARR multiple | Subscription businesses | Recurring revenue focus | Varies by growth rate |
| DCF | Profitable businesses | Theoretically sound | Highly sensitive to assumptions |
| Comparable transactions | Active M&A market | Market-validated | Finding true comparables is hard |
| Acqui-hire | Talent acquisition | Simple calculation | Ignores IP and customer value |
| Replacement cost | Technology acquisition | Practical baseline | Ignores market position |
### SaaS Revenue Multiple Ranges
| Growth Rate | NRR > 110% | NRR 100-110% | NRR < 100% |
|------------|-----------|-------------|-----------|
| > 100% YoY | 15-25x ARR | 10-18x ARR | 8-12x ARR |
| 50-100% YoY | 8-15x ARR | 6-10x ARR | 4-7x ARR |
| 25-50% YoY | 5-10x ARR | 4-7x ARR | 3-5x ARR |
| < 25% YoY | 3-6x ARR | 2-4x ARR | 1-3x ARR |
**Note**: Multiples vary significantly by market, vertical, and broader market conditions. These are indicative ranges.
### Valuation Adjustment Factors
| Factor | Premium (+) | Discount (-) |
|--------|-----------|-------------|
| Strategic fit | + 10-30% for high synergy | - 10-20% for low synergy |
| Competitive process | + 10-20% for multiple bidders | Baseline for single bidder |
| Key person dependency | -- | - 15-25% if founders critical and reluctant |
| Technical debt | -- | - 10-30% based on remediation cost |
| Customer concentration | -- | - 10-20% if > 25% from one customer |
| IP strength | + 10-20% for strong patents/moat | -- |
---
## Deal Structure
### Key Terms to Negotiate
| Term | Buyer Wants | Seller Wants | Typical Compromise |
|------|-----------|-------------|-------------------|
| Purchase price | Lower, more earnout | Higher, more cash | 60-80% cash, 20-40% earnout |
| Earnout | Long period, hard targets | Short period, easy targets | 12-24 months, achievable with effort |
| Lockup period | Long (24-36 months) | Short (6-12 months) | 18-24 months with milestones |
| Escrow/holdback | Large (15-20%) | Small (5-10%) | 10-15% for 12-18 months |
| Representations | Broad, long survival | Narrow, short survival | 12-18 month survival, materiality thresholds |
| Non-compete | Long (3-5 years), broad | Short (1-2 years), narrow | 2-3 years, reasonable scope |
| Employee treatment | Discretion on offers | Guarantees for team | Offers for key people, best efforts for team |
### Earnout Design Principles
| Principle | Why |
|-----------|-----|
| Metrics must be measurable and auditable | Disputes destroy the relationship |
| Seller must have meaningful control | Unachievable earnouts are disguised price cuts |
| Milestones should be achievable with effort | Too easy = buyer overpaid. Too hard = seller disengages. |
| Payment schedule aligned with milestones | Quarterly or semi-annual, not all at end |
| Dispute resolution mechanism defined upfront | How disagreements are resolved must be in the agreement |
---
## Integration: 100-Day Plan
### Integration Decision: Absorb, Preserve, or Hybrid
| Mode | Description | When | Risk |
|------|------------|------|------|
| Absorb | Fully integrate into acquirer | Product overlap, same ICP | Loss of acquired team culture |
| Preserve | Operate independently | Different market/product, brand value | Missed synergies |
| Hybrid | Shared backend, independent frontend | Complementary products | Complexity in execution |
### 100-Day Integration Timeline
| Phase | Days | Focus | Key Activities |
|-------|------|-------|---------------|
| 1: Stabilize | 0-30 | Retain people, retain customers | Welcome communications, 1:1 with key people, customer outreach |
| 2: Integrate | 30-60 | Systems and process alignment | IT integration, tool consolidation, process mapping |
| 3: Optimize | 60-90 | Synergy realization | Cross-sell, combined roadmap, team optimization |
| 4: Accelerate | 90-100 | Scale combined capabilities | Joint GTM, combined product features, growth investment |
### Day 1 Checklist (Non-Negotiable)
| Item | Owner | Purpose |
|------|-------|---------|
| CEO welcome communication to acquired team | CEO | Set tone, reduce anxiety |
| Customer communication (if public) | CMO + CRO | Retain customer confidence |
| Key person 1:1 meetings scheduled | CHRO + CEO | Retention of critical talent |
| Systems access granted | CTO | Operational continuity |
| Reporting structure clarified | COO | Remove ambiguity immediately |
| Compensation/benefits confirmed | CHRO | Address primary employee concern |
### Integration Anti-Patterns
| Anti-Pattern | Why It Fails | Fix |
|-------------|-------------|-----|
| "We'll figure out integration later" | Creates chaos and attrition | Plan integration before close |
| Imposing acquirer culture immediately | Alienates acquired team | Gradual cultural integration |
| Ignoring acquired team's input | Best people leave feeling unvalued | Include them in integration decisions |
| Rushing product integration | Quality drops, customers impacted | Phase integration with clear milestones |
| No integration owner | Nobody accountable = nothing happens | Named integration lead from day 1 |
---
## Being Acquired: Preparation
### Readiness Assessment
| Signal | Readiness Level |
|--------|----------------|
| Inbound interest from strategic buyers | High -- leverage the interest |
| Market consolidation happening | Medium -- prepare while you have options |
| Fundraising harder than operating | Medium -- acquisition may be better path |
| Founder ready for transition | Personal -- ensure this is genuine |
| Growth stalling despite effort | Consider -- but don't sell from weakness |
### Preparation Timeline (6-12 Months Before)
| Month | Activity | Owner |
|-------|----------|-------|
| 1-2 | Clean financials, resolve outstanding legal issues | CFO + Legal |
| 2-3 | Document all IP, ensure ownership is clean | CTO + Legal |
| 3-4 | Reduce customer concentration below 20% | CRO |
| 4-5 | Retention agreements for key employees | CHRO |
| 5-6 | Build data room with all required documents | CFO |
| 6-8 | Engage M&A advisor, begin outreach | CEO |
| 8-12 | Process management, negotiate, close | CEO + Advisor |
### Data Room Contents
| Category | Required Documents |
|----------|-------------------|
| Corporate | Certificate of incorporation, bylaws, cap table, board minutes |
| Financial | 3 years of financials, tax returns, projections, bank statements |
| Revenue | Customer list, contracts, MRR/ARR breakdown, cohort data |
| Legal | All contracts, IP assignments, employee agreements, litigation |
| People | Org chart, comp data, key person profiles, benefits summary |
| Product | Architecture overview, tech stack, roadmap, key metrics |
| IP | Patents, trademarks, proprietary technology documentation |
| Compliance | Certifications, audit reports, data handling documentation |
---
## Red Flags (Both Sides)
### Acquiring Red Flags
- No clear strategic rationale beyond "it's a good deal"
- Due diligence reveals culture mismatch and it is dismissed
- Key people not committed before close
- Integration plan does not exist or is "we'll figure it out"
- Valuation based on projections, not actuals
- Revenue concentration > 30% in one customer
- Founder has no lockup or earnout incentive
### Being Acquired Red Flags
- Only one buyer interested (no competitive dynamic)
- Earnout targets seem unreachable after integration
- Buyer has history of post-acquisition layoffs
- No written commitment for team retention
- Valuation feels low but "speed" is used as pressure
- Buyer rushing timeline without clear reason
---
## Integration with C-Suite
| Role | Contribution to M&A |
|------|-------------------|
| CEO (`ceo-advisor`) | Strategic rationale, negotiation lead, integration vision |
| CFO (`cfo-advisor`) | Valuation, deal structure, financing, financial DD |
| CTO (`cto-advisor`) | Technical due diligence, architecture assessment, integration plan |
| CHRO (`chro-advisor`) | People DD, retention planning, culture assessment |
| COO (`coo-advisor`) | Integration execution, process merge, operational DD |
| CPO (`cpo-advisor`) | Product roadmap impact, customer overlap analysis |
| CISO (`ciso-advisor`) | Security posture assessment, compliance DD |
| Culture Architect (`culture-architect`) | Culture clash detection, integration culture plan |
---
## Output Artifacts
| Request | Deliverable |
|---------|-------------|
| "Should we acquire [company]?" | Strategic rationale assessment with buy vs. build analysis |
| "Run due diligence on [target]" | Due diligence checklist by domain with priority matrix |
| "Value this acquisition" | Valuation analysis using multiple methods |
| "Structure this deal" | Deal term recommendations with negotiation strategy |
| "Plan the integration" | 100-day integration plan with owners and milestones |
| "Prepare to be acquired" | Readiness assessment + 6-month preparation plan |
| "Build the data room" | Complete data room checklist with document list |