Inside Story of Doing a Deal
Abstract:
AGC has completed over 300 deals since its inception in 2003, executed by Partners with individual deal experience of over 20 years. Each deal is different and with every day, we learn more about the art of doing a deal. Getting deals done is a complicated process that does not always happen neatly, as the number of items that need to come into alignment is staggering. A frequent and major hurdle is finding the balance between risk and greed. Clients often need help understanding the true value of what has been built and what deals are possible, as opposed to reaching for valuations that are unattainable. When a house is on the market, the seller always advertises it as a great house, in a great neighborhood, with great schools and opportuni- ties surrounding it. On the other hand, smart buyers dig for details on the age of the roof, quality of the foundation, and the condition of the septic system. In order to succeed, the selling CEO, VC investors, buy- er business unit champion, M&A team, CFO, buyer CEO, and board all have be on the same page. If you lose one, you lose the deal. The truth is that, before closing a deal, it often needs to fall apart multiple times. Sellers need to feel like they are selling too low, while buyers need to feel like they are paying up and taking on too much risk. Cre- ating a competitive environment between interested parties leads to better valuations and cleaner terms. The Wendy’s commercial catch phrase, “where’s the beef,” should be the same question you ask when do- ing a deal. While sizzle sells, you still need to make sure you have the beef. Too often both buyers and sellers make the mistake of focusing solely on the sizzle—the sector du jour—without taking sufficient time to uncover the substance. This can hold back deals from reaching their full potential. It can be challenging to separate financial performance from valuation, but the best deal makers can illus- trate countless companies they banked which grew from humble beginnings to much larger companies. This requires building a bridge from the past to the future using data points that convince clients that the picture you have painted for them is entirely doable. Once the hook is set, the competitive dynamics take over from there to drive to a successful close. Please introduce yourself, your firm, and take a minute to express an opening view on today’s discus- sion topic. What are the most important factors for deal success? What metrics does your company use to judge the success of a deal? Is there a specific type of deal that is receiving the majority of attention in 2017? Why do you think this is and will this trend continue over the next twelve months? Are the best negotiations when neither side gets exactly what they want, or is there a way to make eve- ryone happy? What are some of the most important things a company can show buyers/ investors asking “Where’s the beef?” How difficult is the bankers job to do well by their client during the negotiation stage of a deal? Give an example of a tricky point in a negotiation and how you overcame it? Do you have a personal philosophy or priority that you value most when doing a deal? This panel of many deal veterans are here to share with you their stories of deal making. Discussion Topics:
How can you avoid a bait and switch, or at least recognize some signs that it is coming?
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