Chairman's Message, May 2016
By Jim Jeffries, Chairman, M&A Leadership Council
Too often, deals break up because the buyer approaches the seller with the wrong headset and attitude during discussions, negotiations and due diligence. However, as my friend Jack Prouty would say, “we need to be selling us” at the same time they are “selling to us.” As we train in our Due Diligence and Integration workshops, the due diligence walk with the seller needs to be at least 50/50, with the buyer being willing spend a great deal of time validating the culture and business fit and conveying that information to the seller. We need to help convince the seller of the benefits of working together more than the fair price of the deal.
To that end, here are a few of the issues and barriers that the buyer and seller can deal with together:
- Culture
- Understand it and assess it
- Identify potential “flash points” - Then validate whether the issues are really cultural or a difference in business models
- Be careful in the negotiations
- Don’t give away the store
- Don’t promise that “there will be no changes.” There will be and must be changes - Don’t get backed into promises today that will reduce the flexibility to run the business in the future
- Separate the emotional from the rational and understand that some of the most important issues to a seller may be emotional
Here’s the balancing act according to Jack Prouty, President of the M&A Leadership Council:
What the Buyer Wants
Full access to people and data
Huge data requests – Checklist driven
Trust us!
Rational focus
Time urgency: move fast
Show me your business
Best practices: “Our way”
What the Seller Wants
Limited access to the very few
Continue running the business – limit the information
I don’t really know you……earn it!
Emotional focus
Time urgency: move slow
Show me how we fit
Best practices: “Our way”
Try to remember that you are interested in buying the business because of its value, the people and the contribution they can make. It took years to build and the seller is proud of what he/she/they have accomplished. Don’t inundate them with checklists and questions that lend little to your discovery requirements.
Until next time,
