{"id":1812,"date":"2013-09-26T10:00:46","date_gmt":"2013-09-26T17:00:46","guid":{"rendered":"https:\/\/berkonomics.com\/?p=1812"},"modified":"2013-09-24T09:32:04","modified_gmt":"2013-09-24T16:32:04","slug":"a-million-things-can-kill-the-deal","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=1812","title":{"rendered":"A million things can kill the deal."},"content":{"rendered":"

So you\u2019ve found the buyer, received a letter of interest, signed it, and tied your company up for a period to complete the deal.\u00a0 Everyone on the board is anxious to close this.\u00a0 You\u2019ve committed time to do whatever is needed.\u00a0 You\u2019ve informed your top management of the pending deal and they know they will be impacted and are a bit skittish.\u00a0 You wonder if you should make a public announcement to your troops, worrying over loss of focus, people thinking of jumping ship, competitors finding morsels of weakness to exploit.<\/p>\n

Welcome to the club.\u00a0 If you\u2019re seeing this movie for the first time from the top, you need to ask many questions and be led by your outside team, whether legal, financial, accounting, or networking \u2013 or all.\u00a0 The months between the LOI and the closing are as stressful as any you will experience as a CEO, and there are few ways to reduce the stress.<\/p>\n

First, should you inform your employees of the deal?\u00a0 You know that the buyer will be crawling the offices with legal and accounting personnel, reviewing contracts, financials, governance documentation, intellectual property, leases, and much more.\u00a0 How do you explain this if not by making a general announcement?<\/p>\n

\"Cashing_Out\"<\/a>[ Email readers, continue here…]<\/em><\/span> Let\u2019s back up to the headline.\u00a0 \u201cA million things can kill the deal\u201d is a statement from an experienced professional, and worth listening to.\u00a0 During the due diligence period, before the signing of the definitive documents and establishing the closing date, it is not wise to make a general announcement, and certainly not wise to make a press release.\u00a0 Public companies are forced to release this information in most cases after the LOI is signed, and this may impact you if being purchased by a public entity.<\/p>\n

What could happen to kill the deal that looks so good to all now?\u00a0 For starters, as the due diligence and documentation period drags on, you\u2019ll have to keep your company\u2019s eyes off the ball to continue the increasing revenues and profit momentum.\u00a0 A bad quarter in the middle of the process will certainly lead to the buyer either withdrawing the offer or more likely reducing the price, sometimes to a point that is unacceptable to you.<\/p>\n

Few companies are squeaky clean.\u00a0 And in this age of Dodge-Cox and Sarbanes-Oxley regulation, public companies are thrown by any hint of activities that might have seemed all right in the past world of private enterprise, but don\u2019t fit with the regulations on public corporations today.\u00a0 Paying commissions to undisclosed third parties in order to obtain deals, hiding or entering misleading financial data, associating with anyone with a past SEC suspension, and many more \u201cgotcha\u201d events, qualify as strong deterrents to a good closing.<\/p>\n

Events that you cannot control such as changes in the buyer\u2019s circumstance, a drop in the market price of the buyer\u2019s stock, a bad quarter at the buyer\u2019s shop, all can contribute to abandonment of a good deal.<\/p>\n

Both sides have to work to get a deal closed.\u00a0 Professional advice before and during the process is necessary.\u00a0 No one is able to do this alone, especially a CEO who is involved and too close to see many of these issues.<\/p>\n","protected":false},"excerpt":{"rendered":"

So you\u2019ve found the buyer, received a letter of interest, signed it, and tied your company up for a period to complete the deal.\u00a0 Everyone on the board is anxious to close this.\u00a0 You\u2019ve committed time to do whatever is … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-1812","post","type-post","status-publish","format-standard","hentry","category-the-liquidity-event-and-beyond"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1812","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1812"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1812\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}