Only Fools Rush In….

I always had a caveat when it came to attending out of town conventions – go to bed before midnight because nothing good rarely happens after that. That was particularly true in venues like Las Vegas, Miami or New Orleans where late-night trouble was easy to find – if you were so inclined to look.

In fact, in the category of “strange but true” convention tales, I was about one month into my first publishing job when I returned from an out of town meeting and learned that one of my former colleagues – a married woman with children, had literally run off with one of the conference speakers and never returned either to work or home.

That’s taking first impulses to the extreme.

The same cautionary measures can also be applied to mergers. It’s not uncommon for two parties to become smitten with each other after the first or second meetings. But after that, some common sense needs to come into focus.

What we have found is that after the second meeting it’s prudent to create a non-binding memo of how we view the union coming together both philosophically and financially. It’s a broad-based MOU that obviously can be tweaked and edited before it’s formally presented.

Why after the second meeting? Glad you asked.

Supposing the buyer and the seller firm engage in a series of meetings that drag on for months and then they agree to embark on due diligence – which as you know can be an exhaustive and sometimes expensive process. So, when that’s complete and everything checks out it’s time to sign the contracts. Only after careful examination it is discovered the deal contains terms what are unacceptable to one or both firms. Doesn’t that seem like a colossal waste of time and resources only to find out there’s nothing at the end of the rainbow for either?

Yet there are some who are still resistant to our strategy.

Recently, a firm in the Northeast, who is currently courting a two-partner practice, completed their second meeting. When I offered to help draft the MOU, the managing partner of the potential successor firm called it “premature.” He revealed that he planned to have a third meeting just prior to tax season and then pick it up again in May.

Despite my protestations to contrary he said he felt more comfortable doing it this way. I wished him luck and told me to keep me posted.

But it still reminds me of buying a used car without getting an inspection first.