The May 15 Seattle ACG meeting had interesting insights into buy-sell deals. It was a discussion with one of the sellers of a company ($70 million deal), its process, and had lessons applicable to all deals.
- There’s owner dependency. The seller stated as they went through due diligence it became evident the two owners did a lot of things including overseeing HR, finance, operations, and more. Things under their pay grade. Just like in small businesses.
- Emotions take over. The seller stated his partner took it personally because the buyer’s benefit plan wasn’t as robust as theirs. He was upset for the employees. Emotion creeps into all deals. It’s why I semi-joke half of what we do is quasi-therapist work. There’s always something given buying or selling a business is usually the largest transaction of anybody’s life.
- There will be disagreements. In this case, they’d agreed on a working capital amount, the business was growing fast during the process, and the buyer wanted more working capital. They didn’t get it, but they got the deal done.
Doesn’t matter if the deal is $70 million, $7 million, or $700,000. Owner dependency, emotion, and differences will always be there.
“Money, power, respect – the last one is better. Kendrick Lamar