Newsletter #90: 圆滑 Or Be The Voice Of Reason?

Mac
9 hours ago
3 min read

Hi,

How are you?

In my line of work as a M&A broker, I liaise with business owners, acquirers, investors and partners every day. Very often, everyone comes in with different agenda and the expectation to be understood. This is perfectly normal since this is basic human instinct.

What most people do not expect is that in majority of the cases, my role often requires me to disagree (respectfully), explain the context or rationale, and hold my ground. While it's a bummer for a lot of people, this is the way. (The creed of the Mandalorian)

Below are the examples of the typical demand made from the varying parties. (Sharing the context here)

From a Seller:

Why can't the business be sold for 7X to 10X of the EBITDA? The share price on the stock exchange is trading at 12X to 15X... I am already giving them a discount! They should be grateful for it.
I expect the buyer to pay me 100% cash in the first tranche!
I cannot let the buyer see my customers name during the due diligence phase. What if he runs away with my customers or set up shop to steal my customers?
I expect the business to be successfully sold within 3 - 6 months!
I only want strategic acquirers since they can pay me the price that I am looking for.
You have to get me the buyer at the price I am looking at, otherwise there is no way I will sell. (This deal has been on the market for the last 5 years!)
The buyer is disrespecting me with the offer price! (Even though the offer price and deal structure is on par with the market rate)

From a Buyer:

If the seller is a serious seller, they should be willing to offer 50% to 100% seller financing.
I want the seller to stay on for at least 3 - 5 years post acquisition.
The business is only worth 2X - 3X EBITDA.
I need to ROI in 2 years
Why should I disclose who I am? The sellers should disclose about themselves, not me since they are the one selling.
Can you please share the name and the financials of the company, without me signing the NDA?
How do I know that the seller is legitimate?

From the Partner:

I want to do a commission share with you. You take 50% and I take 50%. Never mind you are doing the lion share of the work as a seller representative.
I want you to pay my contact a share of the commission, because he recommends you to me and I am buying the business.
I want to work with you for your M&A deals because I am in the accounting/ corp sec/ loan brokerage/ real estate business. Even though I am also doing M&A on the side.

While all these maybe an eye-opener to most people, I see this every week. Needless to say, I have to say No, be the voice of reason and take a firm stance, instead of being 圆滑.

I sincerely believe that for Fey Day to be a relevant player in the ecosystem, the only way is to take a firm stance and play the long game. This will require Fey Day Team to share the uncomfortable version of our truth, while taking the risk of stepping on people's tail. Over the past 2 years, we started seeing more people approaching us. Whether it is the buyer, seller or partner, and I think this is an indication that we are doing something right.

As we start to put up more quality deals on the table, plus the number of serious buyers contacting us increases. The odds of closing the deal will naturally increase over time. What do you think? :)