ICON66 – Volume 5
Maximising
Value
7 Key Bear
Traps
1.
Watch the birdie
Keep your eye
on the business
and keep hitting
forecast numbers.
The most common
reason for
purchasers
chipping away
at the price
is that vendors
don’t
meet targets
in the negotiation
period.
2. Transparency
One sure way
of losing a
deal or facing
a price reduction
during negotiations
is lack of
transparency.
You need to
give full and
frank disclosure
before offers
are made.
3. Stress
Watch out for
a significant
increase in
stress as you
try and juggle
the input necessary
in the process
with the management
of the business.
It helps if
you’ve
planned it
and your house
is in good
order, but
in reality
this is rarely
the case. Hospital
beckoned for
one unfortunate
client.
4. Momentum
Keep momentum
in the deal
and the timetable
tight. Purchasers
are busy and
will quickly
lose interest
if information
is not available
or if milestones
are not achieved.
5. Detail
Get as much
detail as you
can in your
Heads of Terms.
A deal is not
done until
it is done
and the balance
of the negotiating
position swings
against the
vendor once
a purchaser
has exclusivity.
6. Housekeeping
Business process
documentation,
organisation
structures
and such, may
sound like
management
consultant
speak but they
can be “dealbreakers”.
A buyer recently
pulled out
of due diligence
after just
one day when
the processes
of an IT service
client were
thought not
to be strong
enough and
this was deemed
to affect the
ability to
scale the business.
7. Cash
is King
Deals that
look too good
to be true
often are.
Be wary of
offers with
a high non-
cash element.
Shares can
go down as
well as up.
Do not accept
the highest
offer when
assessing bids,
one has to
consider the
total package
offered and
also whether
a purchaser
will deliver!
