Despite the lackluster economic climate, merger and acquisition activity continues. Although valuations in M & A transactions are generally lower than during the recent technology boom, certain acquirers are continuing to pay premiums where technology, distribution and other factors are critical to executing strategic objectives.

At the same time, the reality of today's tight capital markets is that many companies must find a buyer or face bankruptcy or closure. Regardless of the circumstances, here are some tips to guide you through the M & A process.

1. Don't wait.
A typical M & A process requires six to nine months from start to completion. If you wait until you have two months of cash left before deciding to find an acquirer, you won't get the company to the end of the next quarter, much less find a buyer.

Other alternatives would be finding some form of bridge financing or cutting costs significantly to reduce monthly burn rates. Many sellers have the opinion that reducing head count will lower valuations. Buyers are focusing on profitability and cash flow, and therefore lower burn rates can often improve your position in a M & A transaction.

2. Pick your advisers.
Completing an M & A transaction in today's market environment is even more difficult than in the past. Therefore it is imperative to have a team of legal, tax, accounting and investment banking advisers who have experience in M & A transactions. What to look for in an adviser:

Good people. Chemistry between advisers and management is important not only in fostering a good working relationship but also in presenting your company to prospects. Find out exactly who would be working on your transaction. Even though it may be tempting to choose a firm based on name recognition, the people you work with will ultimately make the difference.

Transaction experience. Find advisers with successful track records who understand all the twists and turns of the M & A process.

Seasoned advisers. They are best equipped to provide objective and dispassionate advice-knowing when to stand firm, when to negotiate and when to compromise.

3. Any skeletons?
Buyers are risk averse. The greater the perceived risk, the lower the perceived value to a buyer and the less likely a deal will close. Particular areas of risk are in intellectual property ownership, non-transferable licenses or business contracts, lawsuits in process or threatened and misstated financials (even if unintentional).

If there are any skeletons, deal with them proactively; identify the issues and start implementing an acceptable solution that you can present in a constructive manner to potential buyers.

4. Identify targets.
In today's economic climate, few transactions are getting done between companies that have no prior knowledge or exposure to each other. Buyers are focusing on core businesses, not looking to break new ground. Focus on creating a list of five to 20 prospects that already know your product or service, or for whom there is a very clear fit.

5. Angle of attack/defense.
Before a prospect is contacted, make sure you have done your homework and have a tailored pitch. Buyers are inundated with opportunities, therefore it is critical to present a clear and concise assessment of exactly how your offering advances an acquirer's strategic initiatives.

Any angle that will help you through the door should also be used. Find out who is on the prospect's management team and board of directors. If anyone in your inner circle has a connection, use it. Follow-up aggressively with calls and information without being a nuisance.

6. Be prepared.
Anticipate any issues that will come up in negotiation and be prepared to answer those questions. Having done your homework and offering a clear value proposition means exploiting negotiating power to its fullest.

7. Don't hide.
If a problem arises, such as a revenue shortfall, make sure you understand the reason, and then disclose it with the best explanation possible.

8. Keep talking.
Deals can often go bad because the principals stop communicating. Although you want to rely on your advisers to assist you, it is important to keep in communication with the key decision-making principals on the other side. It's always important to reinforce the strategic motives that got the deal going in the first place.

Furthermore, don't jeopardize deal success by letting non-critical points become a major obstacle. Getting all sides in a room to hammer out issues is often the most successful way of resolving issues.

9. Keep your cool.
Try not to let emotions push aside good judgment. During stressful points in the process, take a step back and consult with your advisers by dealing with issues in a constructive manner.

Except for the often rare but uncanny timing, there isn't a whole lot of magic to the M & A process. It comes down to having the knowledge needed to avoid mistakes, hard work and a significant investment of time.