When it comes to mergers and acquisitions – TIME IS THE ENEMY! Time allows people to second guess decisions, consider other offers, revisit criteria, and even re-evaluate original decisions. Time feeds procrastination and allows people to, many times, overthink the situation while riding that emotional rollercoaster that we all try to avoid.
Time allows buyers and sellers to be influenced by outside influences like advisors, workload, employees and clients to name a few. It allows people to second guess themselves.
Common Factors Influencing Deadlines/Timelines to Closing:
- Financial performance can change over time
- Backlogs of work can decrease
- A key employee might leave the company
- A major client changes direction
The more time that goes by from negotiation, acceptance of a letter of intent and due diligence review to the close of the sale, the chances of completing a deal that is acceptable has the potential of decreasing significantly or even ending.
URGENCY IS CRITICAL IN MERGER AND ACQUISITION TRANSACTIONS
Urgency causes buyers and sellers to focus on the outcome that they had originally hoped for when the negotiation started. Urgency compresses decision making and negotiations into a shorter window so that there is a much smaller chance that all the negative things mentioned earlier might happen. Urgency also means that both buyer and seller will achieve their objectives sooner.
The way to instill this needed urgency, beyond the anxiety and desires of a buyer and seller is to manage deadlines and a timeline.
Whenever you decide that something else is more important than the buying or selling of a company and deadlines are missed, the timing consideration will take a backseat and usually, the end result will less likely be in your favor than if you would have focused on deadlines, the timeline and the transaction.