During my career I have been involved in over 300 mergers, Acquisition, Sales and Business Transaction Reviews.
Whether its a relatively small transaction or a multi million dollar merger, they all have the same drivers that either make them wok or turn them into disasters.
I can safely say that I’ve rarely seen an acquisition work, mainly because the parties do not understand the road ahead, what happens post acquisition/merger and more specifically how people feel about the process.
There is a definite set pattern that I’ve observed
- Pre transaction everyone is upbeat and optimistic about what the combination of the entities means for individuals (they tend to go into the transaction with rose coloured glasses).
- Then the transaction happens, money changes hands and everyone drinks champagne;
- But then ….. its all about delivery on the pre transaction promise. There may have been plans to cut costs, integrate sales efforts, grow by product integration. What people fail to anticipate is that the post transaction environment is one of skepticism and basically protection of fifedoms.
- If an owner sold the business, they will have a large amount of cash in hand and make no mistake, if there is an earn out TAHTS what they are aiming at. There are new masters which does not fit well with self made entrepreneurs.
- Camps form of ‘you said, he said’ etc and everyone in the business has an opinion on the way forward, and the pre transaction (emotional) guidance is lost.
how to combat this – go in with eyes wide open. Look at the road post transaction and make sure that there is sufficient upside to meet the return on investment.
The best form of sale is a complete sale of shares, leave the company alone to run as before and DON’T interfere!.