Mick Jagger was wrong.
More than 50 years ago, the Rolling Stones covered an old jazz song called “Time Is on My Side” and sadly more than a few CPAs in their impressionable youth probably took it far too literally. As for me, I’m stunned that the Stones have been around for more than half a century. Take about an age reality check!
But I digress.
Time is not on your side. Not even close.
One person in the U.S. turns 65 every eight seconds. Roughly 60 percent of the equity partners in CPA firms are over the age of 50. Nearly 70 percent of firms with 15 people or less have no succession plan.
But timing doesn’t always focus on the demographics of an aging profession. It applies to unnecessarily protracting the merger process as well.
In many of our CPE sessions throughout the year, our staff often touches on the many roadblocks that can slow down or even derail a merger. But if we had to whittle it down to the number one cause of a deal falling apart – it would be unanimous – time.
Inarguably, time kills all deals.
Procrastination in any shape or form inevitably ushers in deal fatigue and frustration. The chemistry and enthusiasm that two firms initially shared begins to wear thin and ultimately one or both parties throw up their collective hands in a “thanks but no thanks,” parting.
For example, we recently had to talk a buyer firm off the ledge so to speak because the seller firm took months to approve the language of a letter of intent – not the official contract mind you, but a non-binding memo. Face it, the 15th time you read a contract or document you will almost certainly notice something that you failed to spot the first 14 times.
Taking an inordinate amount of time to execute a merger will also raise questions as to priorities. Several years ago, the seller firm requested a copy of the successor’s firm’s employee handbook. When I asked the managing partner he replied that he had a number of deadlines to make and could get to him in two weeks.
So I told him that his response would send one of two messages. Either he was so busy that it would raise doubts in the seller’s mind of his ability to digest another firm, or, that the seller firm was not a priority.
The seller had a copy of the handbook that afternoon.
Now, I’m not suggesting that firms rush into what may be the last and most important decision of their business lives, but here’s an axiom that I like to share with clients.