Our decades of experience have enjoyed hundreds of successful brokerage, lender and technology firm mergers and acquisitions. That said, we can’t remember two that were exactly the same. We celebrate the wins and we learn lessons along the way. The most important advice we can share is a reminder that we are in the people business, and very few people are alike.
As a buyer or seller, understanding your motivations and expectations is the very beginning of the art of the deal. This exploration is best accomplished in casual meetings, meals or conversations. So much is learned through exploring industry trends, competitive forces and the aspirations of the seller or the buyer. Remember, closing the deal is often the beginning of the relationship, not the end.
These casual meetings permit a seller or a buyer to articulate the preferred structure of a deal. Deal structures can range from stock purchase transactions to asset purchase agreements. Deals can initially be minority interests with a follow on rights to a majority interest. Deals may also be a majority purchase where the seller maintains an equity interest into the future. Considerations can be cash, stock or a combination, and the terms of a deal must reflect the motivations and expectations of all parties.
An experience I will remember for years to come occurred in Beverly Hills in Q1 2016. I had identified four target companies that were open to exploring our acquisition appetite. I indicated the day I was available and asked each company leader to pick a restaurant or cafe to meet for 60 – 90 minutes.
What are the chances that all four leaders would pick the exact same restaurant in the Montage Hotel in Beverly Hills? Starting at 7:00 a.m., I had four, 90-minute meetings in the same restaurant. Certain nuances had to be rehearsed with the host staff and waiters. Please don’t say “welcome back, Mark” or “will you be having the same as an hour ago?”—and please don’t ask if I’d like to sit at the same table all day.
Imagine what I learned that day about each seller’s motivations and expectations, contrasting personalities, communication styles, comments about competitors, market dynamics, etc. It may have been the most productive day of my real estate career.
Two of these businesses we ultimately acquired. Two remain independent today.
Invest time with your acquisition targets. They will eventually be your operating partners and your culture carriers. This is the art versus the science.
Like so many other aspects in life, victory favors the prepared.
Mark A. McLaughlin is a leader in the mergers and acquisitions advisory team at the WAV Group. McLaughlin Ventures partnered with WAV Group to provide expanded M&A services to brokerage firms, property management firms, technology firms and lenders in the U.S. For more information on our M&A division, visit https://www.wavgroup.com.