Leadership Lessons Blog

Spotlight on Business Mergers and Acquisitions: Critical Questions

Part 3 - Questions I would ask and critical success factors

In Part three of my conversation with Tim Halligan, President of Exchange Authority, he shares thoughts on what he would do differently and 5 critical success factors for a successful acquisition.

Missed Part 1? Spotlight on Business Mergers and Acquisitions - How to Prepare

Part 2? Spotlight on Business Mergers and Acquisitions - Surprises and helping your team adjust

Celia: If you had to do it over again, what questions would you ask your prospective buyers?

Tim

1. Can you describe for me what you think my business model is?
2. Where do you see the client base coming from?
3. What specific steps are you willing to take to help things grow?
4. What kind of dollars are you willing to spend immediately and in the course of next 2 years
5. What kind of a return on those dollars are you expecting and how soon?
6. If economy goes south what kind of loss and for how long are you willing to carry that loss?
7. MAKE yourself look at worse case scenario - then make it ten times worse than you can imagine. Can you still survive?
8. Can the buying entity provide a transition team that would be willing to meet and discuss issues involving interdepartmental workings without it having to go to highest management each time for decision-making. How are decisions made?

Celia: If you had to provide 5 critical success factors for a successful transition what would they be?

Tim

1. Do Not Do It.

or

1. Create a team approach initially to handle the different aspects of the acquisition and to assist with the EMOTIONAL aspect of the transaction.
2. Make sure an attorney is involved contractually from the on set to ensure YOUR best interests are protected as it relates to the Business Broker.
3. Make sure you have a CPA on board that can maximize YOUR tax position on the sale.
4. Make sure you have your Business Consultant available for advice and to help prepare you for the transition from "running your own show" to "working for someone else."
5. Hire a broker that will listen and understand the business in order to market the company effectively.

In addition, I recommend:

1. Continued support for at least a year from an independent consultant to assist with brainstorming and assistance with staff issues before they become insurmountable. In difficult economic times this is still an on-going issue.
   
2. Internal transition team that can work independently to resolve issues as they relate to differences in business styles and communication.
   
3. Realize it is just a job. You built it, you sold it, and it is not your sole responsibility for its ultimate success. You need to be prepared to let it go as your new owner is probably not going to run it the exact same way you would.