Sometimes it doesn’t add up

More years ago than I care to remember, I toiled at a local newspaper covering high school sports – and I mean every sport – from football to field hockey. I staffed games in wind chills of 10 below zero and others in drenching rains.

But my most frustrating undertaking in that job encompassed basketball game coverage because you had to rely on a school’s official “statistician” to provide the correct information.

So the basic accounting function of reconciling the box score was often an adventure in itself. Too many times, the players’ scoring did not recap to the actual game result. So, just to balance the books – especially if there were 10 games on the schedule that night- you would award free of charge, a foul shot or field goal here and there to a random, but nonetheless, deserving player.

I recalled those episodes of numerical futility recently when the managing partner of a Northeastern CPA firm said he was interested in merging with a neighboring practice which had two of the three partners ready to exit within a year.

The owner estimated that pending due diligence and the seller’s acceptance of the term sheet; the deal would be consummated in six to nine months.

Excuse me?

He repeated it for emphasis – a six-to-nine month window. The reasoning was that they had facilitated at least a half-dozen mergers over the past several years and felt that this was the ideal timeframe.

My thoughts immediately reverted back to the basketball box scores and a difference of two to three points that had to be made up somewhere before deadline.

So my question to him was this. If you had two-thirds of the partnership exiting within a year – or possibly sooner, how could you effectively transition the client base if the deal doesn’t happen for nine months? There are dozens of ancillary tasks accompany any merger that have to be performed – the least of which was announcing the change to the client base and giving them enough time to absorb it.

We have a saying at our company that “time kills all deals” and never was that axiom more appropriate than the above situation.

My counter argument more or less fell on deaf ears. That’s the way his firm did mergers, period.

As it happened, we had other buyer candidates for the seller firm to choose from and while the jury is still out, we’re confident they’ll make the right decision.

That is provided the math works out.