M&A Mistake #8: Ignoring Minority Shareholders’ Concerns
John Simpson
This real life story is about a software development tools company, 85% owned by the CEO, and 15% by a few employees and former employees. We brought them an offer from a large public technology buyer, which the board accepted. I was there when the CEO broke the news to the shareholders. Most were happy, but one, a disgruntled former VP threatened to sue to block the sale, claiming the price was way too low. In fact, there was no reasonable basis for this, because it was a good offer, but the buyer was public, they balked, and were about to walk away because of the potential cost in publicity. The client had to work very hard to get this man to back down and see sense.
Lesson: Make sure any minority shareholders have any reason to threaten anything.
Timothy Goddard
Thanks, John. Now across the pond to Jon Scott, who we heard from at the beginning, who will talk about what happens if there is no sense of urgency to your transaction.
M&A Mistake #9: No Sense of Urgency
Jon Scott
Surprisingly, one of the more common mistakes I see is the seller not responding quickly and efficiently to information requests from the potential buyer. A lot of times this is in the discovery process when you’re getting to know each other. Responsiveness is key in an M&A process. The buyers are busy and if they have already indicated interest and asked for further information you need to respond quickly. Your response tells them a lot about how prepared, organized and detailed you are and how you might likely be to work with if they buy you. A slow response also sends the buyer a signal that you may have a lack of urgency and can cause the buyer to lose faith and move on to their next target.
Timothy Goddard
Well that’s our ten, but we’re going to go last to our founder and CEO Bruce Milne, who has a few bonus mistakes he wanted to share as well.