Every Deal Has Its Own Personality
We are counsel for a deal that was recently announced. The longer I do this, the more it reinforces how each deal has its own personality. Successful dealmaking comes with a variety of factors, many of which are not economic, that present unique challenges.
Deals Are People
Probably the most important lesson I have learned over the years is that deals are about people. Pricing, “collars,” walkaways, and breakup fees are all important, but ultimately the people involved, their preferences, and emotions are critical to getting deals done. Clearly, the perspective is different from the buyers and sellers sides. Selling a company, particularly one you may have started or helped grow over a long period of time, is an emotional experience. Buyers should recognize this and try to “role reverse” and put themselves in the shoes of the selling company. Getting key people on board from the seller is critical to successfully navigating the deal process.
The Art of a Deal
Deals are equal parts science and art. Pricing and mechanics are a given, but it’s the “soft dollar” or “social” aspects of a deal that make it more of an art than a science. Recognizing this probably is the key to successful dealmaking. Based on my experience, how buyers approach sellers can be critical to the process. Selling often is a difficult and unique experience for the management and board. Showing empathy and understanding is significant. Frankly, all things being equal and depending on who stays on after the merger, sellers really take into account the quality, integrity, and personality of the buyer’s management. So, putting your best foot forward is very important.
Using Advisors Well and Properly
The reality is that lawyers and investment bankers work for a fee and like doing deals. That’s just a given. But picking qualified advisors who are sincere about the best interests of your company as well, and who are a good personality fit and work well together, can be critical. Deals can be very stressful. Having advisors you trust in the “foxhole” with you can be decisive. You will need to rely on them throughout for good, sound advice.
Try to Enjoy the Ride
For sellers, this process is often a one-time thing: As stressful as it may be at times, it is important that you enjoy the ride. As long as you do your best for shareholders, you should feel good about your efforts. For buyers, it is a different feeling, often less emotional because they get to move forward. Saying goodbye to your company and the people who make it special is usually the hardest part for sellers. So, prepare yourself for the ride and the twists and turns along the way.