Mama once told me “if it sounds too good to be true, 它可能是.” But Mama (may she rest in peace) didn’t know much about selling a business.
When Bobby (not his real name) called, I could tell something big was brewing. “我今天要见你，”他说, “我请你吃午饭。, 晚餐, 无论, 我需要加入你的日程.” We decided to rendezvous at Starbucks and before we had our coffee orders filled, he said “if it sounds too good to be true, 它可能是, 正确的?”
Bobby explained that the night before he got a call out of the blue from the CEO of a publicly-traded company he had met at a conference in October. Bobby went on to explain that during the October conference he and the CEO discussed a possible joint venture, but nothing had come of it and he had forgotten about the whole idea.
But the CEO had apparently not forgotten. When he called Bobby he told him he’d like to buy Bobby’s company for 2.是去年收入的5倍. Given that Bobby’s EBITDA margin was 18%, this offer was about 14 times EBITDA. Eventhough Bobby’s company was growing at 8% per year, he didn’t understand why somebody would drop so much money on him, 不请自来的.
Bobby said again, “It’s too good to be true, 正确的?”
I replied “if you sold, what would you do next?” Having worked with many entrepreneurs selling their companies, I know that unless the “after-sale life” is thoughtfully considered, it’s likely the deal will fall apart during due diligence, 或者它真的关闭了, the 卖方 will have serious remorse within a few months. “I sure do have a clear idea” Bobby said “My wife Janice wants to go back to Syracuse to finish her doctorate, I’d love for her to do that but we can’t while we’re tied down with the business.”
I was impressed with Bobby’s thoughtfulness, he seemed to have a genuine motive to sell. But he kept pressing me “I just can’t believe this offer, would they really close on those terms?应鲍比的要求, I called the CEO the next day and explained that Bobby wanted me to shepherd the deal through closing, and the first thing I asked the CEO was “why are you doing this?” He got his VP of strategic planning on the phone, and the two of them explained how Bobby’s company filled a gap in their product offering, 一旦这个缺口被填补, the CEO could go to Wall Street and raise more equity to establish a European sales channel.
This strategy explained why the CEO was ready to overpay for Bobby’s company …. the CEO needed Bobby’s company to achieve a broader strategic objective. The amount the CEO was over-paying for Bobby’s company was insignificant in the scheme of his larger objective to open the European market.
Every year I get calls from business owners who have received an 不请自来的 offer that sounds too good to be true. The first thing I ask the owner is to test his/her long-term life objectives relative to the amount of the offer, and if the offer funds those long-term life objectives, it’s logical to go to the next question …. why is the potential acquirer making a seemingly too-good-to-be-true offer? If I hear from the potential acquirer a strategic answer to that question, I see the writing on the wall likely to prove Mama wrong, even when it sounds too good to be true, 这可能确实是真的.
Moral of the story: If it sounds too good to be true, ask a few more questions.