Time after Time

You remember when many of you were raising children and warned them against performing certain safety-defying acts – such as not touching a hot stove?

And then think back of how many times they ignored you and decided on a live demonstration. Many tears, Band-Aids and salve applications later they got the message. Hopefully they didn’t need to learn that lesson twice.

Funny how often the same stubborn principles often apply to grownups. Not that many adults would purposely hold their hand on a white-hot burner, but rather they display their obstinance in other areas.

Take for example inertia.

It has been my experience that accountants can often lay claim to being the heavyweight champions of inertia – particularly when it comes to mergers.

I can no longer count how many times we’ve tried to instill to our clients pursuing acquisitions that “time kills all deals.” It is unquestionably the number one roadblock that prevents the closing of a deal. And yet despite our frustrations, we continue to see it happen. Often. Negotiations drag on ad infinitum and eventually the dreaded killer of all mergers – deal fatigue – sets in.

Recently we were working with a firm that had a number of meetings with a potential seller and when it came time to present the offer sheet on how they viewed the deal working both financially and philosophically, it took them six weeks to present a letter of intent. Let me repeat that for emphasis – a month and a half.

In another case, a seller firm had requested a copy of the employee manual from the managing partner of the acquiring practice. It certainly was not an unreasonable request. But the managing partner explained that the firm was in the throes of the 10-15 deadlines and he probably would be able to forward it to them in a week. Mind you this was likely a document he kept on his hard drive to begin with.

So if you’re the seller firm there are probably two thoughts that cross your mind and both of them not good. The first is that the seller is not a priority. The second involved perceived capacity. After all, if the managing partner was too busy to send a document, how was his firm going to handle the extra revenue and staff post-merger?

Fortunately when I explained this to him, he understood and the seller received the document that afternoon. But sadly I knew that would hardly be the last example I would have to overcome in terms of deal inertia.

Time after time.