What A Good Round of Golf Can Teach You About M&A Deals
What does a round of golf and an M&A deal have in common? The answer is rhythm and timing. One of the first things I learned in playing golf is that there is rhythm and timing to a good swing and a round of golf. The next thing I learned was that it does not take much to throw that rhythm and timing off. Every golfer I know has experienced having a great front nine, then gets held up at the halfway house making the turn, and plays horribly the last nine holes. Or, they walk away from the course on Saturday feeling like they really have their swing grooved and cannot wait for a round the next day! Sunday they hit the course, and after a few shots on the driving range they are left wondering what happened to that smooth swing from the day before. The rhythm and timing is gone. That break, whether it be for 10 minutes at the halfway house or overnight, is enough for a golfer to lose his rhythm and timing. The mental distraction is enough to derail your swing and the round. The frustrating part is no matter how hard you try, only rarely can you get the groove back in time to save the round.
Just like a round of golf, there is rhythm and timing to an M&A transaction and you do not want to mess with it either. To get an M&A transaction completed takes commitment by both the buyer and the seller to close the deal. In a simple M&A transaction, the parties execute a Letter of Intent, due diligence is done, legal documents are drawn up, and the closing occurs. If you are not prepared to move through the entire process in a timely manner then don’t start. M&A transactions are as precarious as a good round of golf. Any distraction which causes you to lose focus on the transaction runs the risk of disrupting the rhythm of the deal. As the buyer, if you delay in completing your due diligence you run the risk of the seller having seller’s remorse and backing away from the transaction. On the other side of the coin, if you are the seller and you are slow in responding to the buyer’s due diligence request or in finalizing the legal documents; the risks of the buyer losing interest or finding another “Better Deal” are increased. Any delay on your part gives the other party an opportunity to have second thoughts about whether the transaction is really the best thing for them. What I have seen happen, on more than one occasion, is the selling party gets a large contract or two while the buyer is distracted, and the deal goes away or the price goes up significantly.
The first step to a successful M&A transaction is the organization identifying a “Champion” for the transaction. Ideally, the Champion would be a member of senior management. But, if that is not possible it needs to be someone with direct access to the C level officers. Depending on the size of the company the transaction Champion is not necessarily involved in the day to day running of the M&A process. The Champion is a person who can make a decision for the organization or has the access to those individuals in the organization so decisions are made in short order. Without a Champion of this stature the chances of the organization losing its focus on the transaction are increased exponentially.
So, when you are working on an M&A transaction and everything is moving along in a steady rhythm do not take the chance of losing your focus. Do not stop at the halfway house for a coke and sandwich. Just walk straight to the 10th tee and let it rip. Whether you are on the buy side or the sell side of the transaction maintaining the momentum of the transaction is critical to successfully completing the deal. An M&A transaction, like a good round of golf, is very very hard to get back on the rails once it has gotten off.
