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Behind the Scenes of M&A – One of the Most Complex Business Issues You Will Ever Face

by on October 23, 2013

SI photo shootGetting involved with M&A wasn’t a childhood dream.  When I was a kid I wanted to be a test car driver or test pilot, a ski instructor or coach, or, when I was in my teens, a photographer for Playboy magazine (yes, I really did).  The common theme to these dreams was that I was the one behind the scenes making the product or success happen.  My career in M&A is the outcome of those aspirations and uses a lot of same skills needed in those other professions.

Like a test car driver or a test pilot, M&A is often seen as “risky”.  However, in my post Acquisition Myths BUSTED, I propose that not only are the risks associated with an acquisition not only smaller but are also far easier to anticipate and quantify than are the risks associated with traditional organic growth.

Like a ski instructor or coach, my role is to work with and support the CEO to make sure he or she performs at their best.  I want to make sure that the CEO makes the best decision possible.  My role is to see the big picture while managing the details.

M&A is deemed to be “sexy” because if you’re involved with M&A you’re on the “inside”.  But that’s the perception of people that aren’t on the inside. If you’re on the inside you’re part of a small group that has information that others would like to have.  As a result, people WANT to be part of the M&A team.  They WANT to be looking at future possibilities.  It’s different from the daily job and sometimes that’s fun.  But it is ALWAYS extra work that you don’t get paid for.  And if it happens occasionally, it’s interesting.  If it happens all the time, it can become tedious.  To be honest, it doesn’t feel sexy being on the inside.  It’s a lot of work.

Most deals aren’t done like Bonfire of the Vanities, or Barbarians at the Gate, or Wall Street, like I explained in my post M&A in the Movies, although some CEOs seem to think they’re in the movies as a deal unfolds.  Most deals are done in a  workmanlike fashion between consenting partners who want to achieve a shared purpose with a lot less drama.  That’s not “sexy”.

I like to do puzzles and I’m particularly drawn to Sudoku puzzles.  There is a solution, I just need to find it.  And to me, M&A is a big puzzle and I really love looking for the right deal at the right price.  I love looking at companies, learning what they do and how they do it, and figuring out if that’s the piece of the puzzle I’m looking for to fit into the big picture we’re trying to create.

In a way, this also addresses my need to be creative.  Each deal has its own set of issues.  Completing a deal requires a creative perspective to addressing a multitude of issues.  Like a painter, no two deals are ever alike.

Buying or selling a company (or part of one) is one of the most complex business issues you will ever face.

  • Covers EVERY aspect of business – financial, personnel, sales, marketing, manufacturing, strategy – in a short, intense period.
  • Issues range from rarefied valuation theories to whether the person across the table likes or hates you.
  • You must always understand the big picture while you sweat the details.

Over time I’ve become a specialist in M&A because I have a passion for it and it really helps that I have the skill set for it.  As I said, it’s not something dreamed about but it suits me perfectly.

p.s.

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation: a Proven 5 Step Process.  http://www.therevenuegroup.net/free-offer.html

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From → M&A, Strategy, Valuation

4 Comments
  1. Mike, we share a passion for successful exits and good wine. Great post.

    You’re so right about the absolute importance of good due diligence. I’d only add one more item: having a clear vision before you start. You too have likely seen companies that, despite having the wherewithal to make good acquisitions, move forward without having clarity about where they are headed. Unfortunately, no amount of great diligence can repair the outcome.

    • Bob,

      Glad you also appreciate good wine. It makes life so much more fun, doesn’t it?

      I always say that you may be able to fix a deal that is poorly structured, you may be able to fix a deal that suffered through poor integration, but you cannot fix a deal that fails due to poor strategy.

      Mike

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