Don’t Get Frustrated by Buyer Slowdowns
You're in the process of selling your company to a buyer. Things are progressing well. But you begin to notice that the buyer appears to be slowing things down. Should you worry? Not necessarily. It could very well mean that the buyer is trying to close another deal before yours. This can happen in any transaction, but it is seen more often when a mid-cap company is selling to a much larger acquirer. In these cases, the buyer can turn their attention to a bigger acquisition target and delay the process for the smaller seller. In fact, this did happen during the process of selling Infinity Software Holdings, a U.K.-based provider of interaction management software for contact centers, to Dura Software, a U.S. company that purchases and operates hyper-niche software companies.
Corum Senior Vice President Joel Cymberg, who was a primary advisor to Infinity during the M&A process, noted that Dura was a very active acquirer. The company, which was founded in 2017, had already acquired 14 companies in a variety of tech niches and geographies. "Dura was doing multiple acquisitions,” Cymberg recalls. “They were doing an acquisition in Manchester and one in Brazil. And the Infinity deal got sidetracked for a time while they tried to pursue completion on one of those deals." Eventually, that other deal also got put on hold and Dura successfully completed its acquisition of Infinity.
According to Cymberg, situations where a buyer changes focus to work on another acquisition ‒ slowing down the process for the initial seller ‒ can be more complicated if it happens just after signing the LOI and before due diligence has started. That’s because it can stop the momentum of the process with the initial seller even before it gets into high gear. In the Infinity deal, the slowdown became apparent about halfway through due diligence.
Cymberg advises sellers not to get frustrated during the process if the buyer slows things down. The buyer may be a serial acquirer trying to close another deal or a buyer concentrating on a larger target or one nearer closing to get it across the line. This is where a professional advisor with extensive M&A experience such as
Corum can help. Cymberg notes that a good advisor can establish if the buyer is still committed and provide the insight to keep the seller on track. He adds, “The aim is to clarify why there are delays. If the buyer is candid and makes it clear that they need to focus on a larger target or one nearer closing, that can make delays more acceptable to the seller." His other advice to sellers: "Have your advisor arrange regular meetings between you and the buyer to maintain the connection and positivity."