The #1 Reason a Merger or Acquisition Fails

What Kills Most Mergers or Acquisitions? Deal Fatigue!

Many merger deals end in a pile of paperwork and countless, endless emails with seemingly pointless questions. This is what I call “deal fatigue”; when one are more parties involved in a merger or acquisition throw their hands up at the amount of information required to make the deal happen. In most cases one party feels overwhelmed and financially disadvantaged by the deal process and decides it is easier to just give up. In most cases, deal fatigue works itself out and the deal gets done; it just creates very long delays and both parties to the transaction become extremely irritated. If you are the one being acquired it may also reduce the amount you ultimately receive.

With the changes taking place in the collection industry today, consolidation is a new reality for most sectors of the industry. As these mergers and acquisitions begin their process there will be many obstacles for the parties involved.

How Do I Avoid Deal Fatigue?

In order to expedite the merger process you need to be proactive and prepare well in advance of the diligence process. By compiling a diligence manual or package that a potential buyer can review, you will shorten the diligence process and expedite the time to closing the transaction. The diligence manual provides detail information on your firm, collection strategy or legal process, staff members, technology assets, audited financials, the principles detailed bios, resumes and background checks along with many other supporting and financial documents you will ultimately have to provide or produce prior to closing a transaction. By being proactive, you will look prepared, organized, and confident and be miles ahead of the competition when it comes time to negotiate.

Most of the law firms in the collection industry were built as lifestyle businesses and therefore will need some polishing to look appealing to an potential suitors. Since many of the law firms and collection agencies that will be consolidated have never experienced a merger or previously been acquired, they will require assistance preparing a due diligence package that is both comprehensive and promotes the company in the most favorable manner.

Copies of equipment lease agreements, credit card statements for 3 years, building leases, vendor agreements, client contracts, compliance audits and certifications and much more will be required to sell your law firm of agency. Lighthouse Consulting has been evaluating law firms and collection agencies for over a decade and we can help you navigate these transactions and help prepare your firm to be competitive in the consolidated marketplace.

Putting the Lipstick on the Pig

That’s not to say that your business is a pig, but to an outsider without the emotional attachments to your business, perceptions can quickly turn into realities. The time to prepare for a potential merger or acquisition is LONG before the discussions and negotiations get started. Start now to create this package and then get a professional to put the lipstick on it. Chances are you have been busy building your collection company and have not been spending your time to make sure it looked good to someone else. As we build our own company we worry much more about it surviving and much less about how it looks to a potential acquirer, but as you begin to market your business for sale you may need to put some “lipstick on that pig.”

It’s important to hire a professional like Lighthouse Consulting to provide the guidance and knowledge to help you polish up your business before it is put up for sale. If you would like to discuss how Lighthouse Consulting can help you to merge, be acquired or purchase other companies call us today at 904-687-1687.

Phillip W. Duff

Phillip W. Duff the Founder of Lighthouse Consulting was trained in Six Sigma while working for Bombardier Capital in 2001, and is highly successful helping organizations improve their processes using the Six Sigma methodology. Mr. Duff has consulted with numerous companies over the last 10 years and has shown the ability to enact cultural change in a company. He has also initiated programs proven to drive positive revenue growth both as an employee and a consultant. His focus is to help CEO’s with a focus on growth. His knowledge of technology and background in debt collections have combined to help companies automate processes and identify which processes provide profits. Mr. Duff has also developed a unique process of initiating cultural change as a part of developing a revenue-driven atmosphere in a variety of formats. This unique philosophy and technique are unseen to date. His substantial experience in the collection industry, Six Sigma core competency and extensive industry relationships can provide you and your team a matchless perspective into your accounts receivable business or any business strategy.

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