Buyers and sellers can leverage the economic crisis: as turbulent economic indicators create a difficult M&A climate, this can be a good time for financial executives to assess their core business and explore positioning options--but incredible due diligence is essential.

• Author: Hagaman, Jr., William R.
• Position: MERGERS & ACQUISITIONS

Ask most professional athletes what determines winning results and they'll tell you it's about natural ability and hard work. Ask the same question of sports coaches, and get a different answer. Coaches talk about winning based on preparation and effective practice.

Like the athletes, in prosperous times--of not that long ago--many business leaders were able to nimbly navigate a wide-open playing field, leveraging abundant opportunities with their natural ability and vast resources.

By contrast, in today's chaotic economy, business leaders must now shift to the role of the coach, preparing the business for the times, focusing on preparation, honing the right talent in the right job and watching their competition.

Just two years ago, the mergers and acquisitions market reached a peak value of $4.2 trillion. Now, down an estimated 28 percent since last July, some speculate that an increase won't appear for at least another 12 months.

True, the mid-level corporate M&A landscape is quiet, but it is not dead. Though turbulent economic indicators make for a difficult M&A climate, this can be a good time for financial executives to assess their core business and explore positioning options.

If a company has reserved the necessary resources to seize buying opportunities, there are plenty of prospects that, if acquired now, can prove exponentially beneficial later.

A recent Boston Consulting Group study revealed that 13.5 percent of mergers in a weak economy produced two-year returns in excess of 50 percent, while only 7.4 percent of strong-economy mergers did so.

Conversely, 14.9 percent of strongeconomy deals produced losses in excess of 50 percent, compared with only 6.7 percent of the weak-economy deals.

For senior executives looking to sell, this is the time to prepare the company to be more attractive for purchase for when the climate improves.

A reasonable assumption would suggest that the ideal time to buy or sell a business is generally when all of the stars are aligned: strong economy; strong stock market; high business valuations; fluid lending availability; and growing revenues and profitability.

That is certainly not the case presently. Therefore, preparing the company now for a future merger or acquisition will put the firm in a position of strength when the climate does improve.

Thus, whether a buyer or seller, preparation is essential and the following guide should help:

* Critical Preparation. Careful planning for the transaction is...