I Did a Double Take
I couldn’t believe it when I saw the title of the book: “Mergers & Acquisitions for Dummies.” Could a DIY guide be actual be helpful enough in selling or acquiring a printing, label, or converting business?
I am a big fan of the Dummies series because they do a nice job explaining complicated processes. But when I saw the M&A for Dummies title I wondered what could be next: Brain-Surgery for Dummies? Nuclear Engineering for Dummies?
As I read through the online “Cheat Sheet” that provides a sneak peek of the book, I realized author Bill Snow was actually imparting some sage advice.
Here, I have paraphrased three of the author’s key points, and added one of my own:
1. Retain capable M&A advisors.
DIY books make you believe you can do almost anything yourself. Kudos to the Mergers & Acquisitions for Dummies book for acknowledging that if you want to buy or sell a business, you should work with a qualified M&A professional.
Why can’t you do it yourself? Like any DIY project, there is a definable M&A process that can be detailed and followed.
But in the real world, too many variables in the business acquisition process make it difficult to pull off a successful deal on your own. This book may tell you how to do everything in the process right, but M&A deals are complicated and involve too many stakeholders to go off without a hitch.
Plus, a book cannot provide you with the connections, experience, and ability to make the right judgment calls when things go wrong.
2. Don’t hold out for the marginally better offer.
At an M&A Executive Forum, I heard financial experts talk about how multiples are rising, but the marketplace simply doesn’t have enough sellers for all the buyers.
There are two major reasons why:
1. Many current business owners are reluctant to move on to another phase of their lives.
2. Other potential sellers think they can get a better price than an existing offer.
Holding out for a better offer can be a recipe for disaster. What if another pandemic hits and the markets go haywire again? What if your production facility catches fire and burns to the ground?
While it’s great to be eternally optimistic that tomorrow will be a brighter day, don’t let that attitude cloud your ability to make a deal. Determine what dollar figure you can accept and when you reach it, do the deal.
3. Know your position with a market valuation.
I blog often about the need to thoroughly understand your financial position. Do you know what your company is truly worth? Have you conducted an independent valuation to see how the marketplace actually values your company?
Before you make a move, know this data. It will drive your decisions, help you understand where you need to improve, and save you precious time.
I would add one more point to Snow’s advice:
4. Find an independent matchmaker.
While this may read as a plug for my Business Matchmaking service, I want to make it clear that you need to work with a professional advisor dedicated to making your M&A a win-win situation for both parties.
Too often M&As fail because they employ M&A professionals that represent either the buyer or the seller. By definition, this means there will be a winner and a loser in the transaction. You don’t want that. You want a win-win.
We launched our Business Matchmaking service to pair synergistic partners and achieve win-win scenarios.
Whether you work with us or someone else who offers a similar service, find a professional committed to a synergistic opportunity. Their reward should be tied to a completed transaction in which both parties benefit. That’s the only way to assure long-term success.
So are you a dummy if you purchased the book Mergers & Acquisitions for Dummies? Absolutely not. In fact, I think you’d be smart to educate yourself on the process as best you can. Just make an even smarter move and don’t try to buy or sell a company by yourself.
Did you read the book? Did you find it useful? Did you try to do a deal on your own? Share your experiences in the comments below. Did the book prompt more questions than it provided answers? Call me. (561) 543-2323