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Closing a deal: Sell out and get out

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I recently completed my 309th corporate finance transaction. Three of those have involved a personal investment.

I admit that, in order to maximise value on a deal, some sort of deferment of the consideration is required (often on an earn-out basis) but the fact is that everyday is like walking across hot coals – painful, depressing and only sometimes worth it.

In my own case, it wasn’t just working for someone else or the change of working practices. No, it was the little things like changing suppliers who had been lifelong contacts, changing fonts and presentation styles, changing meeting processes from informal to structured or vice versa.

Okay, I lived with this (I had to) but I counted the days, if not the hours and minutes, to exit.

If you have no choice but to stay on, consider the following:

* Is the difference in the consideration worth the pain?

* Have you got a watertight contract, with some parachute options if you need them?

* Are all parties 110 per cent clear on what’s expected from them and have legally committed to such unequivocally?

    Even if the answer is yes to all of the above, trust me, you are very unlikely to enjoy it – but it may at least be more tolerable.

    The other vital piece of advice is this: if it’s not going to way you expect once the earn-out starts, deal with the issues that are causing conflict immediately. Don’t let it all fester. I was guilty of doing that and it just made matters worse because, in retrospect, I was worrying about something that could have been altered to suit all our needs. But hindsight is, of course, something we would all love to have a helping of.

    Don’t be afraid of sorting out the issues, however trivial they may seem, and do it without hesitation. 

    Jo Haigh is head of corporate finance for MGR

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