Dec 6, 2023
Bill Snow, Author of “Mergers and Acquisitions for
Dummies.” shares the business valuations and the importance of
understanding EBITDA. He also talks about the challenges and
misconceptions of making acquisitions. Lack of planning,
communication, and dishonesty can derail transactions in terms of
negotiations and finance. He also counsels entrepreneurs to monitor
cash flow statements while managing their companies. Regarding
acquisitions, Bill advises meticulous preparation and deciding
before placing a bid on a company whether an acquisition is a need
or a nice-to-have.
https://bit.ly/TLP-386
Key Takeaways:
[3:13] Bill talks about the nature of mergers and
acquisitions, the price terms and timing, and the payment structure
such as the EBITDA. He also explains its usage and how it doesn’t
work with other circumstances. Bill discusses that EBITDA works
different from company to another.
[10:47] He shares the three segments of mergers and
acquisitions which are the search, negotiate, and finance. As he
explains, finance is the easiest among the three, since you can
just borrow or get other investors to suffice your needs. The
second one is negotiating, which he defines as the most interesting
part if only one is familiar with his/ her actions. The last one is
search, which enacts you to look for a company that will buy. He
added that one thing to differentiate you among other business
people is creating a thesis or proposals to discover what’s in it
for your business to spark.
[15: 08] Bill shares how to make contact and build
relationships. He also speaks about how to use deliberate and
intentional approach in establishing peer-to-peer relationships.
This explains the expectation one should be thinking of when
entering this kind of business, where you will be negotiating with
five people, but only one will win the deal.
[18:07] He explains the need for an accountant to
discover the preferred structure for the seller to effectively
communicate to the buyer and the importance of disclosure of
problems to frame discussions to avoid resulting in a much bigger
problem. Bill also explains how important it is to be honest with
even the smallest problem because it might result in a bigger
problem if not solved earlier.
[21:44] Bill shares how important math is when it
comes to leadership, the same with how business and math is
interconnected as well. He also emphasizes the need to be confident
in terms of their businesses because they have learned about it in
the first place. In addition, it is also recommended to study other
companies with the same company as yours for you to be able to
understand and create a better strategy. He also added how
important it is to work with a financial advisor instead of going
with the flow.
[26:27] He explains the importance and concept of
timeliness and due diligence in integrating acquired business. Bill
also shares how imperative it is to understand your strength and
weakness when doing transactions to determine where you are good at
for you to improve what you are lacking and enhance where you are
better at doing.
[38:32] Closing Quote: Remember, get your facts first,
then you can distort them as you please. -Mark Twain
Quotable Quotes:
“The way a business is valued from a buyer's
perspective is quite different from how people run their
businesses.”
“Put together your plans, get very granular to make
acquisitions.”
“Don't ask. Offer something. Try to figure out what
you can offer.”
“A small issue that may not be a big deal for most
people, if hidden, may result in a bigger problem.”
“Fix what you can and work with a financial advisor
instead of finger up in the air.”
“The key thing with investment bankers advisors is
their ability to negotiate.”
“The most important things are the ability to
negotiate and the ability to get a transaction done.”
“When you have something in due diligence, get it done
in a timely fashion. It will take a couple of years before a
company finally came back enough, and it traded.”
“You're going to have some rough waves, and some
people may not work well with you, you have to get rid of them, or
they'll leave. But you'll be surprised, other people who are kind
of off in a corner, forgotten, turn out to be rock stars”
This is the book mentioned in our discussion with Bill
Snow:
Resources Mentioned: