Capital vs. Influence
Posted on July 30th, 2009 by admin in Financing - M&A
By Mike Myatt, Chief Strategy Officer, N2growth
I have long held that the influence a capital partner brings to the table is significantly more valuable than their funding in the grand scheme of things. I often work with clients helping them to navigate the complexities of the financing world, and since I’ve authored other posts on valuation, capital structure, negotiations, M&A, employment agreements, etc., in today’s post I’m going to focus on what you want out of an investment partner post closing. Hint: its not about the money.
While my philosophy on valuations hasn’t changed in years, my feeling as to their importance has. Valuations are always a dicey proposition, but even more so given today’s business climate. I can’t think of a time in recent history where having third party validation for your valuation metrics has been more critical. Over the years I have particpated in the M&A process from virtually every angle possible. I have been a principal of a company being acquired, as well as a principal of a company conducting acquisitions. I have also served as an executive working on both acquisitions and dispositions teams, and as a professional advisor representing both the buy-side and the sell-side. Having sat on all sides of the acquisition table it has been my experience that regardless of approach, style, timing, culture, synergy, supply/demand drivers, or any other catalyzing factor, the transaction will eventually boil down to valuation metrics.
Term Sheets are a foundational element in justifying your valuation logic. Over the years I’ve had the opportunity to view some absolutely brilliant term sheets, and regrettably, I’ve also reviewed more than my fair share of laughable terms sheets. Guy Kawasaki turned me on to this 
I think it’s fair to say that Blogging for M&A has arrived when two banks merging spawns a blog. I saw a tweet (code for twitter post) from Dan Schawbel about the new 
It seems as if the more layers of the onion we peel back on the chaos in the capital markets the worse the news seems to be. I have long been a believer in the axiom ”where there’s smoke, there’s fire,” and trust me when I tell you that the fire is far from being under control, much less extinguished. You see while most of the attention in the mainstream media has been focused on the debacle in the real estate and public markets, the next wave of failure is about to rear its ugly head. In today’s post I’ll share what I believe is the next segment of financial collapse set to rock the investment world…
If deal transparency isn’t at the forefront of your M&A strategy, you might want to stop and do a bit of thinking. In some ways the world of corporate M&A is much the same as it was 20 years ago, and in other ways the events of the last few weeks have changed the landscape dramatically. The Bailout, the current capital and credit crunch, and the outcome of recent litigation have taken and already inefficient market and made it even more so. In today’s post I’ll share my observations as to what might be the single biggest trend that will influence how transactions will be closed in today’s changing marketplace…deal transparency.
Today’s Myatt on Mondays question comes from an entrepreneur who asks: “What provisions can I place into a purchase and sale agreement to limit my post disposition liability when selling my business?” While there are virtually endless numbers of provisions that can be incorporated into a purchase and sale agreement it is important to remember that in most circumstances when a seller includes language that mitigates his/her risk that the buyer will want a corresponding price adjustment. That said, the reality is that all negotiated business points are just that; negotiated…they are dependant upon how badly a seller desires to dispose of the business, how sophisticated the buyer is and how motivated the buyer is to acquire the business. In today’s post I’ll share some of the more common indemnification provisions that can be used to manage a seller’s risk…
As much as you wish it might be so, due diligence is really not an optional consideration. Have you ever made a decision based upon what you thought was a thorough understanding of all pertinent information only to find out after the fact that you didn’t know as much as you thought you did? It’s not much fun to find yourself on the wrong side of the information gap…Incorrect data, omissions, information that is biased or skewed, misrepresentations, misunderstandings, or any number of other scenarios that lead to the creation of information gaps can be very costly in today’s business environment. In today’s post I’ll discuss the critical nature due diligence…
Public vs. Private finance…The question is, which option is better, and why? Entrepreneurs, investors, and advisors have very strong opinions as to whether you’re better-off with private equity or an IPO when seeking to finance, sell, or otherwise seek investment capital for your company. In today’s post I’ll share some recently released information which may help you make the right decision…