elcome to The Complete M&A Handbook. If you are interested in buying or selling a business, you've found the best resource for your needs— a comprehensive guide that covers virtually every type of M&A situation. Until now, there has been no one-stop manual presenting a panoramic picture of the M&A process. I should know: As an M&A professional, I had long noticed this glaring gap in business literature. After years of expecting someone to fill this hole, I decided to do it myself.
I've experienced M&A deals from both sides of the fence: first as an entrepreneur starting and selling three high-tech businesses, and later as an M&A adviser. Since the mid-90s, I have facilitated or advised on the sale of more than a dozen M&A deals. Today I work at a registered broker-dealer, NetCap Ventures, in Newport Beach, a firm that brokers deals for small- to medium-sized businesses. I also write about M&A for Forbes.com, MSN Investor, Bloomberg Personal Finance, and other publications and appear as a regular guest commentator on CNBC, CNN, and Bloomberg TV.
I've seen too many people jump into M&A deals without knowing what they're doing. The results, predictably enough, are often unsatisfactory—and sometimes disastrous. Not only is the sale or purchase of a company a
very high-stakes proposition, but it's also an incredibly complicated process. Virtually every aspect of business comes into play: negotiation, financial analysis, marketing, personnel management, regulations, contract law, strategic assets, competition, evaluating intangibles, positioning, and more. Of all commercial activities, M&A is perhaps the most skill- and knowledge-intensive. A savvy businessperson would never want to attempt such an endeavor without understanding the process.
Anyone aiming for the best outcome—seller or buyer—must understand how the other side thinks and operates. The M&A Handbook will help you understand both sides of the process. M&A deals should be win-win propositions, but that's possible only when both parties know what they're doing. In these pages, I frequently specify exactly how sellers and buyers can use the information and advice. I don't play favorites; I want everyone to come out ahead.
Although the Handbook assumes very little business knowledge on the part of the reader, it's not merely for beginners. Even those with substantial M&A experience may benefit from the review—or may learn something new. As several of the anecdotes in these pages illustrate, it's dangerous in the M&A game to let your vigilance slip. Each deal is different, and subtle nuances can tip the balance.
Take note that this book should not be considered a go-it-alone manual. As I emphasize throughout the chapters, M&A deals are nothing if not complex, and it would be folly to attempt one without the help of one or more specialists. (Perhaps after you've done a handful of deals, it will be a different story.) Like all business, M&A is a team sport. The better dealmakers know how to work effectively with numerous participants. They tackle M&As with a combination of delegation, decision-making, trust, oversight, wariness, patience, guts, and faith. In short, they know how to collaborate with their advisers and negotiate with their partners on the other side.
For ease of use, this book is organized in a roughly chronological sequence. (`Roughly` because many of the steps in an M&A deal occur concurrently or overlap, and each deal has its own variables that affect the timing and order of operations.) I recommend that everyone, regardless of whether they'll be buying or selling, read through the first nine chapters. Perhaps some people will skim over a few sections, but going through the entire set will provide an excellent overview of M&A activities.
The opening two chapters cover the issues facing sellers and buyers, respectively. In these, I describe the considerations that are peculiar to each side of the table and outline a general `order of operations` that leads to a finalized deal. They also contain many insights concerning psychological factors that can have a huge impact on many deals.
Each of the following seven chapters then covers in detail a major stage, process, or subject—such as due diligence, valuation, regulations, negotiations, post-deal integration, and so on. Depending on the nature of your own deal, some of these chapters may be more essential for you than others. Again, I urge you to at least skim the sections of less immediate interest, so you get a complete picture.
The last handful of chapters covers special cases— hostile takeovers, going private, strategic partnering as an alternative to M&A, and so on. With these chapters, the reader can stick to the subjects that pertain to his or her situation. Someone engaged in coping with a hostile takeover generally doesn't need to read about going public. Then again, you never know. Perhaps there are options in some other chapter that you didn't consider but which could save the day—such as an employee buyout.
My greatest hope for this book is that it contributes to your ultimate success and satisfaction in all your M&A activities.