How Business Owners Can Affect M&A Deals
At first glance, business owners are best-placed to oversee the sale of their company. After all, they are the ones who have been at the helm since the very outset and are likely to have an encyclopedic knowledge of the business’ history, finances, employees past and present and all of the key ingredients that have gone into its success.
While this knowledge is certainly helpful when it comes to dealing with buyers, there are some common mistakes that business owners make, such mistakes that can prove detrimental in M&A deals.
We take a look at some of the factors that come into play for owners when they come to sell their business and how these factors can affect the success of an M&A deal.
In most cases, owners have built their business from scratch and are, quite rightly, proud of their achievements. However, a common mistake they make is to have unrealistic goals and expectations of their role in the business post-acquisition. Owners should be realistic in their self-assessment and have a clear understanding of how their role can be transferred to the acquiring company.
Taking Things Too Personally
When it comes to money, some business owners have a tendency to let their emotions get in the way. Whether this is during the valuation stage or during discussions with potential buyers. Owners are advised to take a step back and try to see the business through the eyes of an outsider. There may be an interesting or quirky story about the business’ humble beginnings, but that unfortunately does not add any money to the bottom line, or in turn, the overall business value.
Doing Too Much
Business owners are always advised to try and make themselves and their role as irrelevant as possible, when discussing an acquisition. While this may sound strange, a business is only worth what someone else can do with it. If the business owner acts as the lead strategist, finance department, HR manager and the glue that holds everything together, a buyer might well be put off. It is advised that owners maintain a comfortable distance while providing good quality leadership in order to make the business as appealing as possible. It tends to be the case that the more an owner is involved, the less the business is worth.
All businesses have their quirks and unique systems, which make perfect sense to them, but perhaps not as much to an outsider. Unfortunately, a potential buyer wants to run the business without being present or having to overhaul simple processes. It is therefore important to spend time and resources, developing a recognised and efficient system as it will pay off in the long run.
It may be a cliché but the truth always comes out, so it is important that business owners are crystal clear during every stage of a merger or acquisition. The chances are that a buyer will eventually find whatever is being covered up, so disclosing it at the beginning will save a lot of time and preserve credibility.
With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.