Avoid Wishful Thinking and Presumed Conclusions During Deal Making

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A deal is a sale with a non-customer.

Some deals help your company acquire new technologies or capabilities more quickly than trying to develop it yourselves.  Some mergers and acquisitions are done between complementary companies to expand the product or service offering to better serve the best customers. Acquisitions can also be done to eliminate a competitor in an important market.

I noticed that the lingering recession has led some tired entrepreneurs to consider acquisitions and mergers as a way to get relief from their intense schedules.  Unfortunately, this increases the vulnerability of the already tired entrepreneur.  Wishful thinking takes over, and the entrepreneur convinces him/herself that an acquisition can solve their problems.  Why not hire a strong “#2” and get centered again before considering any acquisition or merger?

I have become convinced that acquisitions are like marriage.  When a tired single parent marries to “solve his/her problem,” new problems often develop.  Acquisition, merger, and marriage negotiations all seem to go more smoothly when each participant is centered.

But what do you do when/if the two entities don’t seem “centered”?  What if you thought you were negotiating a merger, and the other entity (key person) waffles, seems a bit too nervous, and withholds information? It pays to slow down and expand your view. Maybe the other person just wants to cash out and retire.  Maybe he/she had become bored. Maybe the transaction will only involve the purchase of assets so you don’t take on their debt or “people” issues.  Maybe you should only offer to pay a licensing fee and not purchase anything.  I’ve seen acquisition negotiations end in simple subcontracting arrangements.  We all know couples who concluded that they should just continue dating one another.

The best deals are when the leaders of two companies look for synergy (fit) and leave their options open…instead of starting the process assuming the answer will be an acquisition or merger. If there is not win/win fit, the title of the deal you don’t make won’t matter. It pays to leave the structure of the deal to attorneys.  Whether it’s a strategic alliance, a joint venture, an acquisition, a merger, an asset purchase, or something else isn’t the most important question.

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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