Don’t Bring This to a Closing

solar eclipseBefore 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.

************************ Continue reading “Don’t Bring This to a Closing”

Follow The Money

buddha 1There 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” Continue reading “Follow The Money”

Resolutions Are Hard, Change Is Easier

img_0550Most 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

iceberg pic“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.”

Why Deals Don’t Close

shipwreck

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. Continue reading “Why Deals Don’t Close”

Fewer Surprises; Good

10Fore 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. Continue reading “Fewer Surprises; Good”

Fear Not the Hobgoblins of Halloween

iceberg picIt’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

roughwaterMy 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. Continue reading “Making Haste Slowly”

Not Failing Big; The Secret To Acquisition Success

shipwreckIs 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). Continue reading “Not Failing Big; The Secret To Acquisition Success”

Bad Ending or Orderly Partnering?

elephantMost 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. Continue reading “Bad Ending or Orderly Partnering?”

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