What Happens When I Change My Mind (and don’t complete the transaction)?

graphics failed acquisitionsWhat happens when Larry (your son in-law) loses his plant manager’s job on the east coast at the same time you are scheduling the closing date for your manufacturing company in the Midwest?

Your daughter would love to move the family back here (babies and all) if only her husband could find a good plant manager job in MN?

It has been my experience that no amount of money will stand in the way of grandpa doing what is best for the family (if money is not the driving force behind the sale) and if you are the buyer, no amount of lawyering or threatening will win you this deal.

Most privately held sale transactions don’t treat the issue of deal termination well to start with.

Losses to the buyer of a transaction that was shopped for for twelve to twenty four months and worked on for another six to eight months are hard to recover (don’t forget to add lost opportunity costs).

There are other reasons that hard won deals don’t end well for buyers.  Another in-law example (brother in-law) had spent years siphoning off inventory from the family business and running his own operation with corrupt employees sharing bonus money.  This was uncovered in the due diligence phase after years of search and months of back and forth negotiating.

I think it true that most deals don’t close and many transactions that do close have too much “hair on them” which makes them struggle or fail.

Even the best process and smartest deal making people will have these problems but far more trouble can be expected from a weak team and poor process.

One of our recent public company engagements was with a buyer still paying for a very big acquisition mistake ten years later.  The board was very much like the cat that sat on a hot stove.  It would never sit on a hot stove again (nor would it ever sit on a cold stove).

Shortcuts and a non-professional approach to acquisition can cost allot.  Transactions are all about risk and smart people want it minimized.  Find good people and develop best practices – it saves money.

 

 

 

 

 

Caterpillar – Call Me (I can help)

big_zebra_splshGod knows I make mistakes (and some of them are whoppers) but the combination of errors causing the write down of $580,000,000 / or 75% of an acquisition target’s (ERA Mining) value within a year  of the Caterpillar transaction, is thankfully not yet one of them. Continue reading “Caterpillar – Call Me (I can help)”

The Cost Of Lost Opportunity

On a sales call recently, the prospect had just spent three months trying to close a deal that fell apart when their offer was outbid by a very small percentage.

The prospects Bank financing expires in 45 days and borrowed money will be more expensive or non existent by the time the company closes a deal with another candidate. Altogether, this was probably six to nine months of searching & wasted effort.

This prospect did not have a plan B ready to go.

Why no backup candidate?

The cost of lost opportunity on financing alone is going to be many times what they could have spent to have good back up candidates.

If their financing evaporates (and it might in this market), the cost of lost opportunity becomes astronomical.

A small investment in this case would have gone a long way to guard against a major lost opportunity.

ACQUISITION MINI MBA

Better Process = Better Candidates
Better Transactions

* Acquire key tools to help your company effectively locate the right acquisition/joint venture candidates and complete the best transaction with the greatest efficiency.

* Discover the best strategy, resources, & process (learn where to find the biggest available pool of qualified candidates, how to attract them, & how to manage multiple candidates over time).

* Create a meaningful corporate criteria model (to measure candidates by).

* Get the best information management systems & learn the difference between golden information & useless data.

Negotiations, integration, and relationships (from beginning to end) successful acquisitions require financial and non financial understanding and monitoring.

Combine team building with effective methods, resources, and training.

Organize your team around a powerful approach to finding the best targets and completing successful acquisitions for your company.

On your site or at our location.

Contact; Mike@PackardAcquisitions.com

952-542-9318


PackardAcquisitions.com

ACQUISITION / JOINT VENTURE BRIEFINGS

SunsetFinding more & better target candidates

& reducing transaction risk


Database Building & Contact •  Measurable Criteria  •  Risk Management  • Integration
 

Individually Tailored to your company strategy and acquisition team

Two half day briefings

Summer and Fall dates available

 

For more information contact: 

Mike@PackardAcquisitions.com 952-542-9318

CAllen@PackardAcquisitions.com 651-226-2853

www.packardacquisitions.com

 

Better Tools for Finding Better Prospects
Better Prospects = Better Transactions
*

Effective Use Of Talent

fh000005EFFECTIVE USE OF TALENT

 

The challenge for the CEO of a company that wants to grow through acquisition is that the CEO is also charged with running the company.  This presents a conflict even in larger businesses that have a dedicated ‘corporate development’ or an ‘M&A’ function.  Too often, an ad hoc acquisition team is recruited from daily jobs and, as a result, neither the acquisition search nor the daily job is done as well as it must be.   No wonder that acquisitions take too long and rarely deliver the value expected. 

 

Compounding this is the attitude that “our industry is small” or “I know all the players”, but the truth is that until you take an objective and broad based look at the opportunities, you really don’t know what will fit the best.  An external perspective is of great value because an expert doesn’t bring a lot of  baggage in the form of preconceptions  about what might add real value.   

 

Consider using a ‘retained search’ firm for finding and researching acquisition targets.  An extensive and well-defined search will allow you and the team to focus on the highest and best use of your time – evaluating the best candidates for acquisition.    After all, the objective is to improve the success rate of your M&A transactions.   

 

Cliff  Allen, Packard Acquisitions

 

Researching and Profiling

Privately Held Companies for Acquisition

Office/Cell:  651-226-2853

www.packardacquisitions.com

 

Have something to add?

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

Proper Financial Planning Before the Sale

water-lilies

“Proper financial planning before an equity event pays off.” 

 

 

 

 

In the high-stakes environment of a sale—evaluating offers, trying to close, overseeing the interests of the company and employees—business owners may overlook the impact of deal terms on their own finances, and thus risk leaving very large sums of money on the table.  Our experience has shown that integrating potential deal terms, key tax and estate planning strategies, and the owner’s personal financial goals can allow a business owner and his team of advisors to tailor the transaction most advantageously.

 

In a recent situation, we were able to assist an owner and his deal team in answering three key questions:

  1. What is the minimum offer they could accept?
  2. How should he invest the proceeds?
  3. What is the best strategy for transferring some of the proceeds to the next generation?

 

Understanding the minimum amount he could accept to meet his lifetime spending needs, while still transferring some wealth, was a key to entering negotiations.  Second, the owner had a misconception that he could invest the proceeds conservatively and meet his lifetime spending.  In reality, sustaining spending over the longer term with an all-bond portfolio was surprisingly difficult because of inflation and taxes.  And third, our analytical framework helped the owner and his estate planning attorney quantify the impact on the owner’s lifetime spending by gifting private shares before the transaction or utilizing a GRAT (Grantor Retained Annuity Trust) strategy to transfer wealth to his children.

 

In summary, the sale of a business often allows an owner’s spending, legacy and philanthropic goals to be met, and the likelihood of meeting these goals is much higher if strategies to meet them are mapped out well in advance of the transaction date.

 

Craig W. Kleis

Phone:    (612) 758-5041

Email:      craig.kleis@bernstein.com

www.bernstein.com.  

 

Have something to add?

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

 

 

 

Create a free website or blog at WordPress.com.

Up ↑

INVISIBLE CHILDREN

Acquisition, the inside story

Pacquisitions's Blog

Acquisition, the inside story

Dan Stewart Media

Promote. Express. Create.

WordPress.com

WordPress.com is the best place for your personal blog or business site.

The Changing World of Employment

The blog presence of Vallon, LLC and our friends!

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.