How start-ups can get the best from an M&A transaction

Nigeria's tech ecosystem continues to make headlines, most recently with the acquisition deal between U.S. fintech giant Stripe and Nigeria's payments company Paystack. To delve into how start-ups can maximize the benefits of mergers and acquisitions (M&A) transactions, CNBC Africa's Kenneth Igbomor sat down with Babajimi Ayorinde, a Partner at TNP-An Andersen Collaborating Firm. The conversation shed light on key strategies for founders to navigate M&A deals successfully in the tech sector. Ayorinde commended the Stripe-Paystack deal as a significant win for Nigeria and Africa, highlighting the recognition of the tech talent pool in the region and the expansion opportunities it presents. He emphasized the importance of laying the groundwork early and having the right professional advisors in place to strengthen a start-up's negotiating position during M&A talks. One crucial piece of advice Ayorinde offered was for founders to consider the regulatory compliance of their businesses. Non-compliance could not only deter investors but also impact the valuation of the company. Additionally, maintaining a good rapport with potential investors is vital, as the chemistry between parties can significantly influence the success of a deal. In the rare scenario where investors question the founders' ability to lead the company forward, Ayorinde noted that it is uncommon for investors to seek the removal of founders, especially in the early stages of a business. Investors typically aim to align with the founder's vision and may even include provisions to retain founders post-investment. Overall, the conversation underscored the importance of meticulous preparation, regulatory adherence, professional advisory support, and fostering strong relationships in driving successful M&A transactions for tech start-ups in Africa.