Some deals fail....this tells a story

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by a searcher from University of Toledo
in Shaker Heights, OH, USA

3w ago

Some deals fail....this tells a story

Currently, tens of thousands of acquirers (borrowers) are facing the loss of their home equity, their personal financial assets, etc... see this LinkedIn post: redacted Let's discuss the probable factors that are driving these failures in hopes of establishing best practices to prevent adding our own names to this list.

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reply by a searcher 3w ago
from University of Toledo in Shaker Heights, OH, USA

You illuminated a HIGHLY underrated subject, employee retention. There is so little attention paid to "human capital" in the analysis and diligence phase of deals it's scary. I've seen acquirers of union businesses not investigate the unfunded liabilities. I've seen acquirers buy companies with no understanding of the employee benefits plan, including fiduciary responsibilities of the plan sponsor. And lastly, who really is asking for HR complaint history for the last 7 years? When is the last time raises were offered? Is the company margin strong because the business under pays the labor? I could write a book on this...but who reads anymore...

reply by a professional 3w ago
from Duquesne University in Stamford, CT, USA

I think it’s almost 100% underestimating what’s required to run the business. Even looking at the details, running the business can seem easy from an outside perspective. It can also seem easy to slap some tech on it, clean up ops, hire someone, and wipe your hands clean. That’s what’s pitched but it’s never that simple. There are so many moving factors, and the posts from Antonio and Paul highlighted some big ones that aren’t at all obvious in standard diligence - they come to light when you takeover, or if you have the chance to shadow the owner and really get a sense of what is dependent on them. Even if they’re working 15 hours a week, upfront you’ll probably need to do more. Asset ownership is really about owning the downside in addition to the upside. You have to have the strategic mindset to know what to do when it’s underperforming - hire, build, sell, fire, etc. It’s all yours. I think that a lot of first time buyers come from a corporate environment where they’ve owned projects, but in corporate you’re typically protected from the financial downside if a project fails even if you own it. It can definitely be a hard mindset shift, and I think that’s a piece of ownership that’s not taught or sold well to first time buyers right now.