In the last of my short series on danger signs to watch out for
when considering putting your business up for sale, I looked at
timing. Acting too soon and without due consideration can be more
damaging to your future prospects than you could possibly
imagine.
This time round I'm going to look at over-enthusiastic buyers
who may easily seduce you with their flattering words and big
ideas, when in fact they may not have the structure and firepower
to deliver on their promises or have simply not thought their
proposition through properly.
Watch out for first-time and inexperienced acquirers who are
most likely to fit into this category. Some of them can be
dangerous to you and your business quite simply because they don't
have the necessary M&A experience to know how to see a deal
through.
You might find yourself spending and lot of time, resource and
emotional energy getting a long way into the process only to find
that this type of buyer hasn't thought about some of the obvious
issues like client conflict, what your agency means for their
business strategically or post deal integraton.
Over-excited buyers will often talk about how they're looking
for a presence in your market, or that you have an offering that
they don't have, or that they're not in the UK and want to be
there.
When dealing with this kind of buyer, it's down to you as the
agency owner to do your own due diligence in as many strategic
areas as you possibly can. Due diligence isn't a one way street and
it certainly isn't the sole right of the buyer. As the seller you
are also perfectly at liberty to challenge the way a financial deal
structure is put together if it doesn't effectively align value
realisation with the agreed commercial objectives of the
partnership.