M&A Coach

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The Situation

5I have just been engaged by a company that provides a good Questionning faceexample of the range of services I provide. This is a very successful local company that has been courted by a strategic buyer for months. The Sellers agreed to a general outline of a transaction and, to show the commitment the Sellers and Buyers had to one another, they signed a Letter of Intent (“LOI”). The Sellers began to have second thoughts on some aspects of the deal. I am familiar with their CPAs by having worked with one of their other accounts and was referred in by them.

Scope of Work

10So what can I do for the Sellers at this point in the deal? The makings of a deal are in place. All that needs to be done is to get through the Due Diligence and execute a Definitive Purchase Agreement. These Sellers are smart enough to recognize that these next 60-90 days are the most crucial days of the deal making process. The terms of the LOI need to be flushed out, particularly the terms of the Earn Out that was mentioned but not detailed. An Earn Out is an often-used technique to bridge a gap in value perception between Buyer and Seller. It is also used when the future years of the business are so uncertain that only by making the compensation for the transaction contingent upon future success can a fair price be achieved. The application of Earn Outs can be complicated. I have negotiated many of them in my career and I will be able to add value to my clients in this area.

Proceed with Caution

9Due Diligence, an integral part of the deal making process, is fraught with danger. It must be timely, well organized and completely responsive to the Buyer’s requests. Many deals succeed or faCautionil because of the efficiency of this process. I will also be able to be helpful here. We do not want to “enable” the Buyer to re-trade the deal at this point.

To a Fitting Conclusion

As often happens, I will be present during these final and crucial days and hopefully be helpful to both sides of the transaction in getting it done well. The Sellers know that my fee is purely hourly based with no success fees involved. That keeps my motivation on the well-being of my clients – not necessarily on getting a deal done. Completing a transaction is not always the best course of action. Sometimes, the best deals you do are the deals you do not do.

Experience Working for You

ronaldGlickmanRon GlickmanI have been in the merger and acquisition business for over 30 years. I have helped people sell and helped people buy companies. Now, for a reasonable hourly fee, I am helping them to be as smart selling their companies as they have been running their companies. I am not there to actually sell their businesses. I am there to help them prepare for the day when they decide to do it! And, like in this case, I am brought in to help them get through the process.

It’s never too early to bring me in!