Time and time again we see M&A Axioms coming into play for business owners. We hope this list helps you ask some timely questions of your organization and your investment banker as you contemplate liquidity options. Enjoy!
- Time kills all deals
- If you have one buyer, you have no buyers
- Think, Know, Prove / Trust but Verify
- There are only 2 buyer emotions: Fear & Greed
- Sell on the way up, not on the way down
- You cannot time the market, but you can be prepared for market moves
- After you sign the LOI the negotiating power goes to the buyer.
- 99% of pre-emptive offers are offered at a discount to the market
- If a buyer does not sell by age 70 – high likelihood, they will not sell
- On average. sellers overvalue their companies by 59% (Mass Mutual Study)
- Every deal dies 3 times!
- 4 D’s – death, disability, divorce, & disagreement (partner)
- Deal is not done until the deals done! Do not count your chickens or take foot off the gas
- Buyer and seller are never truly aligned until the check clears (escrow and earn-out released)
- Selling to a strategic is like turning and battleship – On their time, not yours
- Businesses are bought not sold
- Due diligence is Difficult – How difficult? Twice as much as you imagined – unless well prepared
- An entrepreneur who tries to sell their company his / herself has a fool for a client
- Due diligence is a two-way street
- Customer concentration kills deals
- Deal killer in M&A is a seller’s value expectation vs. what the market is willing to pay.
- Deal killer is weak, vague or inaccurate financial reports and controls
- Financial Buyers can be unimaginative – Give them a path forward and proforma, way to say yes.
- Best Time to sell? Trifecta of M&A – Personally ready, Business is ready and market Hot!
- What is the definition of a valuable company? One that does not need you to run it!
- We all leave our companies one way or another. Horizontally or Vertically – You Decide!
- When to sell – on the way up!
- When to sell – 55 years old when achievement and risk aversion are in line
- Your acquirer will likely fall between 5x – 20x your revenues – “The 5x – 20x rule”
- Always leave a little squeeze in the orange for the next guy when selling your company
0 Comments