Don’t Bring This to a Closing

Before I tell you the one thing you should never ever bring to an acquisition closing, I need to give you the background….

Company X was a successful company. Especially when you consider that on $3MM in revenue it spun off 30% in pre-tax profit. For over twenty years the owner, (we’ll call him Harold) ran and grew his business with savvy planning and shrewd decision-making. 

Harold’s only son, (we’ll call him Donald) worked in the business and had spent time in each discipline as he was being groomed to take over when Harold was ready to pass the baton.

Best laid plans and all that.

Harold was hospitalized after being diagnosed with advanced cancer and 24 yr old Donald was put in charge.

Fast-forward five weeks and Harold is back in the office part-time while working through his radiation and chemo regimen.

(It is important to know that company x is a small, 10-person niche manufacturing business with long-standing employees)

 Harold is in his office when five of his employees come in and shut the door. They say that they speak for rest and tell Harold that they will not work for Donald.  Donald has been derogatory and denigrating to the ‘peons’ for years. They had laughed Junior off as they were treated wonderfully by Harold, generously paid, and received abundant benefits for their good work.

However, during Harold’s hospitalization, Donald’s attitude had sharply worsened and more importantly, was observed doing cocaine at work.

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Tales From The Crypt Of Family Business

George (dad) really wanted his son (Don) to have his profitable 10 person niche manufacturing business when the time came.  Don worked in the business for 20 years and knew process and people and how to run the business.

But when I talked to the employees, to a person they stated they would quit if that ever happened.

Follow The Money

There is no reward that beats cash when it comes to investment.  Value investing is defined by how much cash is returned per dollar spent.  Warren Buffet is my favorite speaker on this topic, “Our acquisition preferences run toward businesses that generate cash, not those that consume it […] however attractive the earnings numbers, we remain leery of businesses that never seem able to convert such pretty numbers into no-strings-attached cash”

Share Your Best Or Worst Acquisition Search Experience

My Best acquisition search experience was a 24% return on a direct mail piece I did for a client some years ago in the temporary help field.  Out of about 100 searches I have never seen anything like it.  Hundreds of candidates and most of them qualified (stunning success).

Resolutions Are Hard, Change Is Easier

Most New Years Resolutions don’t stick. Work on change. It is a process with a greater chance of success. Accomplishing a single positive change will make you feel better (a whole lot better than the vast majority of people that don’t keep their New Years resolution).

Best wishes for a terrific new year and a successful positive change in your life.

Favorite Lawyer Quotes

“My client was so sure he was right! Every time I showed him a red flag – he charged at it like a bull at a bullfight. The results were predictable.”

“Some mistakes can be papered over. Some cannot. The cost of the difference is astounding.”

“Bad acquisitions can cost you your company. If you’re lucky in a bad acquisition – it’ll only cost you your profits for a decade.”

“People don’t have to listen to me. They should. That’s what they pay me for.”

Finding Superior NON-BROKERED Acquisition/Buyer/JV Candidates

Contact me for next week’s free, short (ten minutes + questions) personalized webinar to discover the best process & tools for lowering risk and increasing the quality of buy/sell/JV transactions,

Mike@packardgroup.com 952-542-9318

An Uncomfortable Family Reunion

A business owner, we’ll call him John, grew his rebuilt truck parts business over 30 years to 20+MM – no small achievement. John’s  company was a major employer in a small town. John himself was a celebrated benefactor at school fundraisers and church events.

Assembly, Packaging, & Kitting Search

Our group is searching for companies in the assembly, packaging, & kitting business with sales of under 10M in the Midwest for acquisition & joint venture.

This is an ongoing search and timing can be over the next few years.

Why Deals Don’t Close

Directors have it doubly hard when it comes to acquisitions.

They have to hire someone that knows how to find appropriate candidates and execute transactions successfully (this person needs a combination of very specific talents – often misrepresented in resumes) and the board must be clear about the criteria necessary in the search (the difference between needs and wants).

Talking with M & A lawyers, you will find that about 50% of deals don’t make it to closing. There are just so many things that can go wrong and it is so costly when it happens.

Fewer Surprises; Good

Fore sight is the ability to see potential realities that will prove or disprove a current strategic plan.  Every now and then, hind sight kicks us where we went wrong.

Over the years more than a few clients have worked hard to bring new (or improved) technologies to market only to find that tons of dollars later, the market has shifted and recovering sunk costs will be difficult or impossible.  And what to do next is not easy either.

The Best Buffet isms

Now and then I like to post fun and readable quotes from the business world.  Warren Buffet never disappoints (submit your own & tell us your  favorites).

On Harley-Davidson (NYSE: HOG  ) and its customers’ loyalty:

“Any company that gets its customers to tattoo ads on their chests can’t be all bad.”

A Bear And Her Cubs

 

It is said that the most dangerous place a person can stand is between a bear and her cubs.

For a more meaningful business metaphor, let’s turn the bear into a company with a Not Invented Here engineering team, and me walking into this company with a non-organic growth opportunity.

I will still be eaten alive.

Caterpillar – Call Me (I can help)

God 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.

Learn Acquisition/JV Best Practices Webinar (& where to find the best non-brokered candidates)

Introduce yourself to powerful acquisition/joint venture tools and process for discovering multiple, qualified, non-brokered candidates and avoid the biggest risks facing your next transaction.

Sign up for Packard’s free, short webinar and stop wasting time on opportunistic and broker driven deals.

Ten minutes plus your questions; Mike@PackardGroup.com

Why All The Bad News? (Why 80% of Acquisitions Don’t Add Value)

Acquirers often fail to take advantage of effective systems & people of purchased entities.

The most damaging and easy to avoid pain that companies inflict on themselves is the loss of perfectly fine and happy people through poor communication, or thoughtlessness.

True stories;

Acquisition Cost Benefit Analysis & Risk

Family business spends 4 years & 1M plus to make acquisition (75 candidates investigated, 40 site visits, 3 offers – no transaction completed (none of the candidates were a good fit)

Fear Not the Hobgoblins of Halloween

It’s the ghosts of acquisition waste and failure that’ll getchya.

Candy filled witches & goblin kids can be kinda cute,

In their chocolately faced sugar high sort of way.

But there is nothing pretty about finding out the frightening facts about non disclosed legal actions, disgruntled key employees, or the haunting feeling that the *acquired target’s inventory is not what we paid for.

We’re all for Toddlers in bedsheets enjoying the acquisition of unhealthy treats, but we draw the line at poor process and tools for acquisitions.

Get out with your candy bags and children and enjoy the sweetness of Halloween

But call us for a less scary experience in the world of acquisitions.

Making Haste Slowly

My experience with acquisitive companies is that they suffer from a few common mistakes.

Too little effort determining what fits (process),

Too little attention to the non-financial audit (people), &

Making a square peg fit into the round hole (egos).

This explains why the failure rate of most acquisitive companies is real and deserved.  In practice, retaining the best and the brightest talent demands meaningful communication and genuine effort.

Acquisition Cost Benefit Analysis Saves More Than Money

Knowledge is Power.  How many years and how much money should a board allow management to invest before questioning the strategy of their corporate acquisition team?    Can your board define success or failure?

Contact me for our free short (8 minutes + your questions) webinar,

Mike@Packardgroup.com

When Acquisitions Hurt

Companies losing money due to poorly chosen acquisition targets outweigh those profiting from such transactions by large measures.

They can be seen cobbling together broker driven deals nursed & prodded to closing over the objections of their advisors (who still have to be paid when the deal falls apart or implodes later).

If Half of Acquisitions Don’t Add Value & …

If half of acquisitions don’t make it to the closing table, how can you & your team turn the odds to your favor and not waste time & resources on this expensive & risking endeavor?

Identifying what doesn’t work can be a good first step.

Not Failing Big; The Secret To Acquisition Success

Is the secret to success in acquisition simply not failing Big?

In my experience, this is right thinking.  Small failures allow us to fight on – big failures can be deadly.

Last year we worked with a public company that had completed a badly chosen acquisition ten years prior and was just getting out of the woods from those financial losses and bad memories.

Cat never sitting on a hot stove again analogy still in force (this cat would never sit on a cold stove again either).

Short, Free, Better Acquisitions Webinar- July 11th 9am Central Time Limit 5 people / session 15 minutes + questions Contact; Mike@packardgroup.com

Short, Free, Better Acquisitions Webinar- July 11th 9am Central Time Limit 5 people / session 15 minutes + questions Contact; Mike@packardgroup.com

 

 

Bad Ending or Orderly Partnering?

Most dissolved businesses have had the opportunity to partner & save jobs, revenues, customers, & some benefit for the owners but chose instead to stick to their current non-workable plan of doing the same thing to the end.

Deer in the headlights, it can’t happen here, this won’t last, & other common human responses explain the disasters awaiting those who refuse to acknowledge hard realities.