Managing Potential Roadblocks to a Successful Sale or Merger
It’s a big deal, it’s your life’s work and it’s your nest egg, so let’s look at the key factors that are critical to success.
In this article we will focus on factors outside clients, staff and overall fit as the gravity of those factors deserve their own analysis…….So, here are the best of the rest.
Doing a deal for the wrong reasons
The fundamentals just need to make sense in a holistic way. The market is full of eager and anxious buyers (often first time buyers) chasing scale at any cost. Be wary of perusing the top bidder outside the wider context of the deal. Filling excess capacity, absorbing overhead or propping up a firm in decline is not a good reason to enter a transaction.
Good Faith Negotiations
It’s always best to remember that what you are working on is not a ‘walk-in walk-out’ (WIWO) negotiation. It’s the beginning of a long business relationship based on respect and mutual responsibility. How you negotiate and what you say matters!
Poor Deal Structure
It's hard to accept that there is such a thing as a deal that is “just too good to be true” especially if it’s in your favour. If the financial terms just don’t stack up, the likelihood of resentment followed by a resigned or anger driven lack of effort will often lead to unmet commitments and, in some cases, relationship breakdowns: the fast road to failure.
Botched Operational Transition
This is a fine line. The key is understanding what things to change, when to change them and how to roll this out without overwhelming staff or causing business damage via service or financial failure. So, analyse all operational platforms, assess which would be best updated and then set a steady schedule including training. Don’t aim to do it too fast and be mindful that clients and staff are the real priority and the systems ultimately need to serve them not just the firm.
Communication
Clear and honest communication is very important. Make a plan and set expectations, meet and talk regularly. Document obligations in reasonable detail and setup a system to follow up and support each other. If the fit is right, this should not be a chore.
Self Esteem
This can be a big change for everyone involved. If it’s your first transaction in leadership of a merger or acquisition you will have inherited more pressure and responsibility than you have ever had and you may for the first time be leading other very experienced professionals. On the other hand, an incoming partner or owner in transition may for the first time not be the ultimate final authority on all matters. In either case, the human element should never be discounted and a competent leader will need to manage this.
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