Hi guys, Andy with the Exit Advisor
here. I help people buy and sell plant
hire companies. Here are five things
that an acquirer should be thinking
about during the acquisition process. So
number one, which is the really the most
important one for me, and that goes for
both buyers and sellers. Um, but no deal
is better than a bad deal. Sunk cost
fallacy is is is real. Um, imagine
you've you know, you've gone down the
route of looking for a business. It's
taken you three or four months. you've
now entered into due diligence. You've
got costs piling up from the lawyer
side, but the more due diligence that
you perform and the more you negotiate
with the seller, the more red flags
start to appear. So, information is is
taking time to get to you. There are
things that the seller isn't prepared to
concede on uh as you're negotiating that
you you consider fairly insignificant.
All of these things are compounding. Um,
and all you're thinking about is, "Well,
I don't want to pull out now because
I've spent so much money. I might as
well carry on with it." That is just not
the attitude to have. No deal is better
than a bad deal. You do not want to have
completed and put, you know, possibly a
house on the line with with PGs for a
bad deal. Take your time, zoom out,
assess it, speak with your broker. Is
this right for you? Um, it might be that
it's just a couple of blips and we can
get over it. But, but ultimately, you
know, if the seller isn't performing in
the way that you think that they should
be and his legal team are difficult and
and that you're not getting the
information you want, it might be time
to call it a day. No deal is always
better than a bad deal. Number two is
spend some time in the business. You
know, I don't see enough people doing
this. It's it's the place where you're
going to learn the most about the
company, how the people are interacting
with each other, how they're interacting
with customers. Um, you know, are
processes that you're you're looking at
in in the in the due diligence process.
Are they being followed? Are they
actually live or are they just AI
generated documents that someone stuck
into the data room to tick a box? It's
really important to see how the business
performs. And I just don't think enough
people do it. you're so engrossed in
negotiating small details of an SPA or
or or a buying agreement and you know
going through the data room checking
that legal contracts and and financials
and stuff are what they say they are but
really that you're going to find the
most amount of information about the
business by spending time in the
business. So do that as much as you can
and and a good seller isn't going to uh
behave in a way that restricts that, you
know, and again as I sort of harp on
about all the time, communication is is
key and a good seller will will be
relatively transparent with you as much
as their lawyer will allow them. Um but
yeah, spend some time in the business.
Don't don't be afraid to do that. Number
three comes down to the relationship
that you you're building with the buyer
uh with the seller and that is trust but
verify. So you know if if a seller tells
you something you know this machine is
in good order then great trust them but
also make sure that you're due doing
your due diligence and and checking for
certificates of conformity and annual
service records and you know lower
inspections if it needs it etc etc. So
trust but verify. Number four is a
really good one and it's mystery
shopping. Uh, you know, as you get
towards the the the sort of end of the
transaction, don't be afraid to get some
people to phone up and ask some
questions or put some orders in and and
see how the higher desk are performing.
You know, are are they generally
helpful? Are they rude?
You know, this is this is kind of a
snapshot of how they treat their
customers. And it's a really good way to
get behind behind the scenes and get an
unfiltered look at at how they really
behave. Number five is probably my top
tip, which is keep cash on the balance
sheet. Keep something behind after the
transaction in case of any unknowns that
you know haven't haven't come up in due
diligence. There is always something
that you haven't thought about that
happens post completion and it's
important to have enough cash to to make
sure that you can deal with that. Um,
due diligence, you know, someone like me
who's going to help you through the due
diligence process means that you should
be covered, but ultimately there are
things that happen that are just outside
of anyone's control. And it's important
to not have maxed yourself out to to buy
a business and then, you know, you need
a 20 grand bill paid in the first month.
to keep some cash on the balance sheet.
Thanks for watching, guys.