Reply
by a searcher
from University of Denver
in Boston, MA, USA
Kyle - I just posted last week on what not to do after seeing this pattern and didn't know it was being taught as QLA method until a few folks commented. I'm happy to jump on a call and give some feedback as a self funded searcher and what I see wrong with it. Here's my post below:
Rant: Don't do this as a searcher Dear Searchers, I've seen this interaction 3x in the last week and just want to make a quick PSA that I think it's a bad approach. I'm a self funded searcher and have bought multiple accounting firms so I can relate. SO, here's what happens: - Searcher emails me saying they're looking for accounting services with their plan to to multiple acquisitions - They send a +10 page deck that shows a board of old men, big plans to buy multiple businesses, what industry they're after, and fancy images (overkill and unnecessary) - They book a call with our firm. 2 of them have been reading from a script where they posture about their future roll up, why that industry, how awesome their board is, and how IMPORTANT IT IS TO FIND THE RIGHT ACCOUNTING AND LEGAL PARTNER - Then they proceed to ask if our firm will do work for free and/or roll all fees until after closing because they're going to be a BIG M&A ROLL UP MONSTER in the future - They also brag that they're going to use break up fees in their LOIs so that any seller who backs out of a deal has to pay them a fee if they change their mind - I try to explain our firm, our fees, and what I normally see with LOIs - I ask if they've sent any LOIs yet and they say no - They tell me their board has done a thousand deals and everyone does it this way and they only way they'll work with a vendor is if they discount or delay all fees until closing because they're a big deal After seeing the exact same playbook and hearing a script, there's got to be some mastermind or group that's teaching people this. In this searcher landscape of transactions $1-10M purchase price, this ain't it. It's just bad advice and you sound like a robot. A robot that doesn't even have something under LOI yet. My advice and comments: - I can totally empathize that broken deal costs suck and searching can be expensive. I had multiple deals die. - Yes some legal, accounting or advisors will roll part of the deal costs into close. But you have to spend some money out of pocket or at least a small retainer. Otherwise the bad professional you hire will cost more later or have the wrong incentives to get paid at closing - You'll greatly reduce your chance of LOIs getting accepted if you put break up fees in every one - Take advice from other people outside your board or mastermind trying to teach this playbook - Reviewing deals and getting something under LOI is your most important hurdle first, not a deck - If you use similar approach with sellers you will turn them off vs building a relationship first That's it for my rant. Onwards.
Reply
by a professional
from University of California, Berkeley
in Tampa, FL, USA
from University of Denver in Boston, MA, USA
Rant: Don't do this as a searcher Dear Searchers, I've seen this interaction 3x in the last week and just want to make a quick PSA that I think it's a bad approach. I'm a self funded searcher and have bought multiple accounting firms so I can relate. SO, here's what happens: - Searcher emails me saying they're looking for accounting services with their plan to to multiple acquisitions - They send a +10 page deck that shows a board of old men, big plans to buy multiple businesses, what industry they're after, and fancy images (overkill and unnecessary) - They book a call with our firm. 2 of them have been reading from a script where they posture about their future roll up, why that industry, how awesome their board is, and how IMPORTANT IT IS TO FIND THE RIGHT ACCOUNTING AND LEGAL PARTNER - Then they proceed to ask if our firm will do work for free and/or roll all fees until after closing because they're going to be a BIG M&A ROLL UP MONSTER in the future - They also brag that they're going to use break up fees in their LOIs so that any seller who backs out of a deal has to pay them a fee if they change their mind - I try to explain our firm, our fees, and what I normally see with LOIs - I ask if they've sent any LOIs yet and they say no - They tell me their board has done a thousand deals and everyone does it this way and they only way they'll work with a vendor is if they discount or delay all fees until closing because they're a big deal After seeing the exact same playbook and hearing a script, there's got to be some mastermind or group that's teaching people this. In this searcher landscape of transactions $1-10M purchase price, this ain't it. It's just bad advice and you sound like a robot. A robot that doesn't even have something under LOI yet. My advice and comments: - I can totally empathize that broken deal costs suck and searching can be expensive. I had multiple deals die. - Yes some legal, accounting or advisors will roll part of the deal costs into close. But you have to spend some money out of pocket or at least a small retainer. Otherwise the bad professional you hire will cost more later or have the wrong incentives to get paid at closing - You'll greatly reduce your chance of LOIs getting accepted if you put break up fees in every one - Take advice from other people outside your board or mastermind trying to teach this playbook - Reviewing deals and getting something under LOI is your most important hurdle first, not a deck - If you use similar approach with sellers you will turn them off vs building a relationship first That's it for my rant. Onwards.
from University of California, Berkeley in Tampa, FL, USA