5 rules for dealmaking
Do's and don’ts learned from years of experience – and mistakes
Prognosticators have written about the ‘art of the deal’ in countless publications over the years. For certain, and in hindsight, there are many, many brilliant dealmakers from whom we can all learn. Pragmatically, however, the next deal you do — whether it involves buying or selling a business, bringing on new talent or adding a new product or service — will be uniquely yours in terms of what’s happening inside your business and your industry, as well as socially, generationally, economically and politically.
Beyond the sage advice that “often, the best deals are the ones you don’t do,” there are a few do’s and don’ts I can offer from my own experiences (and mistakes) over the years.
Fight the right fight. Be certain that, if successful, the initiative at hand either will solve important problems or create meaningful opportunities. You will likely regret acquisitions merely for the sake of growth or excitement.
Pick the right horizon. Time frames for integration and value creation are often longer than anticipated, regardless of the amount of due diligence you conduct upfront. Don’t sand bag, but set reasonable expectations and contingency plans to avoid unnecessary panic or fear of failure when things don’t go perfectly right from the start.
Culture eats strategy for lunch. Success is always driven by having the right people and leadership in the right place and at the right time. We have all spent many, many years creating our organization’s unique approach, value proposition and desired customer experience. Don’t think others will just “get it” or learn it through osmosis. Invest significant time validating that the people you’re bringing on share your passion and values; confirm that by including your long-time leaders in every step of the process.
Engage “times 10.” You likely will have a small group intimately involved in the initiative on both sides. Within the bounds of confidentiality, if you can broadly engage and inform more deeply into both organizations, you will create a contingent of ambassadors that will help ensure success. And once you can go “public,” really ramp up the engagement to create forums for interaction and inclusion to build enthusiasm and a sense of ownership.
Acquisitions, as well as initiatives to build talent and expand products and services, may seem easy when you put your ear to the marketplace. That’s because you only hear the good stuff and seldom hear the full truth. Seek all the advice you can get. But at the end of the day, your leadership team needs to be introspective and disciplined to ensure you are chasing the right opportunities in a manner consistent with your company’s approach, culture and objectives.
And yes, mistakes and missteps will always be part of the game.
Randy Myeroff, CPA, CGMA, is CEO at Cohen & Co. and has led the firm to grow more than 10 times in size and to significantly expand its accounting, tax and consulting services. Navigating mergers and acquisitions, offering proven negotiation skills, tapping capital resources, structuring ownership succession plans and providing strategic and family wealth planning are all a fit with Randy’s expertise. For more information, you can reach Randy at (216) 774-1102 or at [email protected]