Finding Humor in Today’s M&A Environment
By: Howard A. Samuels

With a few exceptions, the prognosticators are still forecasting doom and gloom for the M&A market, especially for sellers. While many a tear may be shed, we believe that it is important to keep ones sense of humor through these troubled times. Accordingly, below is our top 10 list of some recent observations/anecdotes that we have found amusing through our M&A advisory work. The names have been omitted to protect the guilty.

#10 A company thinking that they can sell a newly built manufacturing plant as a going entity, yet it has no products, no customers, no revenues, no management and no employees.

#9 The same company in #10 thinking the plant can be sold in 4 months.

#8 “Dynamic Stability” – the term a CEO/Seller uses to explain to potential buyers the reason why his company has had flat sales for many years.

#7 Conducting a manufacturing plant tour with a potential buyer when all employees are on lunch break.

#6 A CEO referring to his sales philosophy as “Ratcheted Chaos. When asked to elaborate, he explained that he manages the sales efforts based on Brownian Motion. (Note: The CEO is an engineer and rocket scientist by training).

#5 A buyer agreed to put his house up as collateral for a bank loan to fund the acquisition and emphatically stating that his wife would have no problem with co-signing. A few days later he called back to say that he and his wife would be getting divorced and that he would be unable to use the house as collateral. Note: The deal was saved by some creative thinking between Mercator and the bank.

#4 Ten minutes into an integration meeting with an acquired companies West Coast sales force, a sales rep got up from her seat and headed to the door as the VP of Sales was in the middle of explaining new sales processes and account assignments. When the VP of Sales asked where she was going, her reply was, “The information is great, but I gotta go blading dude.”

#3 A seller tells a potential buyer that no family members work in the business. Later he introduces his wife, daughter and brother-in-law during a facility tour.

#2 During a trip to Europe to meet a potential acquisition candidate, the VP of Business Development borrows the local Managing Director’s car to drive to the meeting. He pulls up to the hotel where they are meeting and tosses the keys of the car to the valet. After the meeting he goes to retrieve the car only to find that the hotel has no valets and that whoever he tossed the keys to stole the car. Two years later the local Managing Director receives a call from the police with good news and bad news. The good news is that they found the car. The bad news is that it is in Algeria, it is totaled and all the occupants are dead.

And the #1 amusing M&A anecdote is:

After a closing, the CEO was flying back home with a multi-million dollar check that he had just received for selling his company. When he tried to buy a round of drinks for the plane, the flight attendant said that would be too much work and promptly sat on his lap and tried to convince him to take her to dinner once the flight landed. While the flight attendant sat on his lap, the check got passed around amongst the other flight attendants and passengers. He eventually realized that he had lost track of the check and had the flight attendant use the intercom to ask the person with the check to return it. Note: The check was eventually returned before the flight landed.

While each of these items may strike us as amusing, there are some important lessons to be learned from each one about how not to buy or sell a company. These also highlight the fact that an outside M&A advisor can interject some pragmatic and objective assistance to maximize value in a transaction. After all, we try to keep sellers “laughing all the way to the bank.”