Anyone Can Do M&A – Right?

A middle market business owner who chooses to represent himself in the sale of his own business will never know the value of the offer never received, or the deal terms that never were negotiated or the financial sum he left on the table. Why do owners shun M&A Advisor or engage inadequate inexperienced professional services?

Many successful middle market business owners have gained some M&A experience along the way, working with accountants, lawyers, valuation “experts” and have just enough experience to put their own best interests at risk. In many instances the owners have experience buying a smaller business, well understood in a similar industry and typically with little risk. Is this experience sufficient to engage with those who have been focussed purely on M&A and to come out with the best deal, to risk so much?

Dennis Roberts*, a US M&A Advisor and industry veteran likens providing professional M&A Advisory services to golf. “One of my fondest dreams always has been to play golf in an imaginary world in which my score for each round reflected my self-confidence rather than my actual skill. That par is irrelevant and unknown. Were this the case, I would find myself on the pro tour in no time.

Come to think of it, how hard can it be? After all, swinging a club at a ball is … well, it’s just swinging a club at a ball. How hard can it be for most of us not to play like a pro? Most of us have essentially the same physical and mental traits, as well as the ability to hone our techniques and our mental toughness. Most of us own essentially the same golf equipment and can seek out professional training to enhance our skills, to boot.

Barring some providential escape to a world in which we all get to play the golf game of our dreams, however, there is only one problem all the rest of us face when dreaming of facing off against the pros: the scorecard … and par. The devil, as always, is in the details. Thousands of details come into play in a span of 18 holes and, maybe, three hours’ time. The golf swing is but one of these details: As simple as it seems, it is also all but impossible for mere mortals to execute in a consistently flawless manner. Middle Market M&A transactions are complex in ways similar to golf. “The round” played by selling business owners routinely stretches over the course of months, upwards to as long as a year. The closing price of a completed transaction undoubtedly represents one’s score at the end of the game, but as measured against what?

Furthermore while gentlemen’s wagers in golf might set someone back a few dollars on a bad round, a round of Middle Market M&A sales, played badly, can cost an owner millions, even tens of millions of dollars. Most owners unfortunate enough to play the M&A game badly will walk away from the sales of their business with one consolation prize: They will leave the game unaware of how much they lost by assuming they were pros at the M&A game.

There are a few simple reasons so bright a line can be drawn between the golf pros who dominate the professional tour and the rest of us duffers: 

• The pros pursue life-long learning, continuously working with other pros to refine their games, improve their stamina, and enhance their mental games.
• For pros, the game of golf is no game at all. It is work.
• The pros’ successes reflect their singular commitment to the game of golf and to winning at it.
• Because these pros “make it all look so easy,” we too often find ourselves deceived. “I can do that,” too many of us think, without ever coming close.”

To maximise the sales in your business engage a salesman, to understand your accounts employ an accountant, to develop the best products engage an engineer, to maximise your business sale value engage an experienced M&A Advisor!

*Reference: Roberts, Dennis J.. Mergers & Acquisitions: An Insider’s Guide to the Purchase and Sale of Middle Market Business Interests