Case Study: Left at the Altar…Again

shipwreckThe owner of Company X had been interested in acquiring Target Y for a long time. Finally, the owners of Target Y were open to discussion.

Owner X traveled to negotiate the deal, corralled the owners of Y, negotiated and negotiated, and (after several months) he finally struck a deal.
Leading up to closing, the final preparations were in process: lawyers and accountants were engaged and deployed, more travel, more due diligence.
At the 11th hour, the owners of Target Y changed their minds and nixed the deal.
Owner X retreated to his office to lick his wounds (and pay the bills).
Fast-forward six months (more than a year after the first negotiation meeting). The owners of Target Y call to say they are now serious about doing a deal. Owner X jumped at the chance and negotiated a new deal.
The weekend before closing he receives a call from owners Y that they are entertaining another offer. Owner X demands a final decision by the end of that day. Owners Y call that night and accept his final offer.
At closing the deal fell apart.
Owner X now tells the story and adds that, “Even if the purchase price today was zero – I would walk away.”
The costs: 18 months of focused attention, huge diligence fees and opportunity costs, lots of stress, and no deal.

Moral of the story:  In the world of acquisitions, dating one candidate is not a practical strategy.

A disciplined and focused process in acquisition search reduces risk, time and expense.

It also finds and qualifys more and better candidate while giving buyers an option for dealing with  the unexpected.

Submitted By,

Cliff Allen

Packard Acquisitions
Researching and Profiling
Privately Held Companies for Acquisition

Office/Cell: 651-226-2853 Fax: 651-578-7567

Have something to add? Your own business wit?

Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.


One thought on “Case Study: Left at the Altar…Again

Add yours

  1. 18 months …hmmm. sounds like the deal I just went through (or didn’t). What really struck me as bizarre – actually a wakeup call – is that somewhere in the middle of all this – Delta pondered, negotiated and consumated purchase of Northwest and GM went in and out of bankruptcy. And we used to think that only small companies could turn on a dime. Takeaway here is do the deal quickly or dont do the deal.

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