I have recently had the pleasure of negotiating the sale of several mid-market transactions (values between $10M – $100M) to multi – billion dollar acquirers. On some deals LockeBridge identified the Buyer, but on others we were called in after there had been multiple conversations between the Parties. One thing each of these deals had in common, no matter how big the buyer nor how insignificant the impact of the purchase price on their balance sheet, they all work very hard to negotiate the absolute best deal they can. In most cases a person in charge of Corporate Business Development or M&A does the negotiating and in most cases their performance bonus is at stake!
I have witnessed various buyer tactics. In some cases the perspective billion dollar buyer employed the “wining and dining” approach, other times I was seated in a stark conference room with no food or drink eyeballing six suits from various disciplines all seated on the other side of the table. Indeed in my former life I was one of those suits sitting on the buy-side of the large corporate entity. There was really no emotion or passion on my side of the table. The reward was a closing bonus and maybe a few pats on the back.
It’s just the opposite when we are representing the closely held private business. When we extract more than our fair share of the deal synergies from the billion dollar buyer, for the benefit of our salt of the earth client, you can bet there is passion. Often times the premium price we extract from the Buyer is life altering for our client. When it is done right, which of course is the vast majority of times, it is one of the best “feel goods” I have ever experienced. Okay, more stories another time. Let’s get down to some business and discuss how to take advantage of the Buyer’s deep pockets.
Note 1: The salt of the earth client is our typical client who founded his business 20 or 30 years ago. He borrowed money from his relatives, worked 60 hours a week at the neglect of his family, and got chest pains never knowing if he would make it. Thirty years later he has fed his family from the earnings of the business. He is married to the business, and the sale of his business will be both a financially and emotionally life altering event. Believe me, I know this scenario all too well, as I have built and exited multiple businesses of my own.