mergers and acquisitions: best practices and worst pitfalls presented by dev warren ceo ascendant...
TRANSCRIPT
MERGERS AND ACQUISITIONS:BEST PRACTICES AND WORST PITFALLSPRESENTED BY DEV WARREN
CEO
ASCENDANT ADVISORY GROUP, LLC
We continue to see consolidation in the industry and with each announcement follows defection and disappointment. If you truly are ready to grow your firm through “merger” or an acquisition, then this session is a must for you and your team. There are some very basic rules to M & A that can prevent disaster and leave you with the best opportunity to reach your desired outcomes. Come hear the best practices and worst pitfalls of the Engineering M & A process.
WHY IS YOUR FIRM SPECIAL?
• Tell me what sets your firm apart from your competiton?
• What sets your people apart?
• What sets your clients apart?
• Why are you special?
WHAT IS THE BEST WAY TO SCREW THAT UP?
• Try to bring someone in who is different and make them act like you
• Key word is “ACT”
• Culture is the #1 issue in firm M and A and results in devastating effects
M AND A IS BAD!
• Weird coming from a guy who makes 60% of his income from Acquisitions and Divestitures
• Not all M and A is bad but over 70% of the deals we see should never occur
OBSERVATION 1
• Most people are doing it for the wrong reasons
• M and A will not fix your weakness
• If you cant bring in new business and someone else can, it is because you are broken and you will most likely break them
• If you cant retain the best people and someone else can, it is because you are broken and you will most likely break them
• If someone else is kicking your butt in a line of business, it is because you are broken and you will most likely break them
• M and A fixes nothing!
OBSERVATION 2
• There is no such thing as a merger so don’t lie to yourself or your people
• Do any of you need coddled?
• Neither do your people
• Someone always has to take control and it is the right thing so don’t hide it
OBSERVATION 3
• Strengths can only get better when you are open to using BEST PRACTICES, NOT BIGGEST PRACTICES
• An impartial party needs to determine who has the best process and best people and let that win control of the future
OBSERVATION 4
• People will leave during a transaction
• If you keep them in the dark, your best people will leave…because they can
• If you try to play politics, you will lose
• FIB example
• Don’t be cute, be honest
OBSERVATION 5
• Without a strategy to achieve a desired vision, most firms pick the worst option because it is the easiest
• Set your internal vision first and then find the target that fits it best
OBSERVATION 6
• If you don’t have your own house in order, you have no business acquiring or being acquired
• Your issues will become exponential in a post transaction world
• Elephants never stay hidden
OBSERVATION 7
• Just because we all got along at dinner doesn’t mean it’s a fit
• Due diligence is the key to a successful transaction
• If it can overcome every obstacle then it’s a go, otherwise walk away
• And by the way, you are the least suited to perform due diligence because you are not objective
OBSERVATION 8
• The most expensive part of a transaction starts 6 months after the cash traded hands and the ink is dry
• There are no such things as “cheap deals”
• Training and Integration
• Keeping key people
• 132 Key People were targeted, how many left in 2 years?
OBSERVATION 9
• You cant be a little bit pregnant or a little bit dead and you cant be a little bit committed to a deal
• You either are in or out. If you are in make it happen and go, don’t languish in perpetual indecision. If you say no then walk away and don’t come back.
OBSERVATION 10
• Don’t avoid decisions.
• Make them fast and often, especially post closing.
• If indecision rules the day, you will keep all the bad from both sides and it is a nightmare.
• Transactions are the best time to cut the problems out on both sides
OBSERVATION 11
• Earnouts don’t happen…ever
• Pay for what you are getting at close and then don’t revisit it.
• Earnouts were designed by attorneys and accountants to make more money and make both sides hate each other
OBSERVATION 12
• Clients will leave because of firms joinging, they rarely if ever come to you because you joined.
• Plan on attrition because it will happen
• Don’t plan on growth
FINAL THOUGHT
I hope you are all scared to death about M and A because it’s a huge venture that takes a lot of time and money. It is only a good idea for firms that are ready to commit that time and money. Firms that have a strategy, seek the best targets, aren’t looking for “cheap deals”, and are looking for great people, can find success in Acquiring, but it is rare.
Your thoughts and Questions?
