2018 M&A Research Cost Comparison
March 20, 2018
Let’s do a quick cost comparison of CAPTARGET’s research support services vs. internal fulfillment using a sample firm for reference below:
To stay competitive many firms are investing heavily in back office resources in the form of research tooling and skilled labor – but even in a frothy market, these fixed costs can be hard to manage in the volatile world of M&A.
Regional, 3 Managing Directors, industry agnostic M&A firm operating in Texas and surrounding areas. The firm has been in business 15 years and takes on approx 14 client engagements each year.
Each MD is required to generate their own deal flow and manage the clients they bring to the firm. That said, they have less time to manage the deal prep and back office functions. These back office needs include: Prospect list compilation, buyer research, occasional financial modeling, industry reporting etc.
Historically, the firm has handled research in-house, carrying the following expenses:
- 1 seat enterprise data tool – 2.5k per month +
- 1 research analyst with 4 years of experience – 5k per month base + incentive and benefits
- Training, equipment, and overhead costs
Fully loaded, the example firm has paid as much as $102k per year to support its back office needs.
- Opportunity to grow internal talent base
- Long term commitment to costs leaves little flexibility
- The firm spends money on training up employees only to have them leave a few years later
- Access to only 1 data source
- To scale, the firm must hire more analysts and buy more tools
- $2500 per month, committed on a month to month basis
At this price point we provide the labor and the data access needed to fulfill any middle market M&A back office request.
- Short term commitment basis – total flexibility
- Ability to scale up and down without disrupting your day to day processes
- Access to more data tooling
- Low turnover means you are not constantly working with new analysts
- Managing remote work involves some effort from Managing Directors, but at an 80% savings the cost of this involvement is nominal
Take the next step to using CAPTARGET’s services for M&A teams here: On-demand analysts for middle market M&A firms.