By John B. Weber, Vice President, Water Street Advisors – A boutique M&A Advisory firm which acts as an intermediary representing business owners who are selling their businesses.
One of the basic ingredients that we all have been taught at one time or another is that a big contributor to your success in business and in other areas of life is simply showing up. Being timely, prompt, following through with your promises can all fall under the heading of ‘showing up’. In these post-Covid-19 times, showing up is not as easy as it was, nor is it something to be taken for granted. Technology and the adoption of it by many forced to work from home during this time has made it somewhat easier to show up. Some may think that showing up in person will become a thing of the past. I recently read about a new cooking robot being introduced and rolled out in White Castle kitchens called Flippy the French Fry Robot (although I am not sure whether I would want to be working next to a robot called ‘Flippy’ when it is handling a basket of hot food from the deep fryer). Flippy always will show up for work, ready to flip fries and burgers, but will they need a human being to show up to cook in the future?
Showing up in business dealings can also have other meanings. In mergers and acquisitions, we at Water Street Advisors believe one way to show up is to always be as transparent as possible when it comes to communicating financial information and other important metrics that can help a buyer assess the value, to them at least, of the business being sold. Financial statements that reconcile from one year to the next, cash flow (EBITDA or Sellers Discretionary Income) add backs that can be verified through payroll records, accountant prepared financial statements that can be tied back to internally prepared financial reports all help to tell the story of the company in a way that does not result in surprises or roadblocks for the buyer.
Transparency can work in the other direction as well. The seller wants to know that the buyer is capable of completing the transaction and has the financial wherewithal to follow through, especially if seller financing is to be part of the proposed deal structure. In that case, the seller wants to know that the buyer has assets and liquidity to make good on any promise to pay if the company that the buyer now owns runs into financial hardship. The buyer can allay these fears by providing personal or corporate financial information, or by providing references.
As the transaction nears closing, showing up means delivering on the promises made. We had a situation recently where a buyer was what we would consider far along in the process with the seller and was performing due diligence on the company. The buyer had a change of heart and decided not to purchase the company which came as a surprise to the seller and his team. It was not due to any change in the company’s financial status, the company has performed better than expected in this environment and it met the tests of the accountants performing due diligence. The reason given is that the buyers investors had changed their mind on the investment due to the uncertainty of the environment in this time of Covid-19. While the reasons are somewhat understandable, much cost and lost time could have been avoided had the investors communicated these concerns earlier in the process. The buyer in this case did not show up in the end.
Whether you find yourself on the buying or selling side of a transaction, ‘showing up’ is an important ingredient in the recipe for a successful sale.
John B. Weber | Vice President
Water Street Advisors, LLC
(630) 201-0348
JWeber@WaterStreetAdvisors.com
www.WaterStreetAdvisors.com
John B. Weber is Vice President of Water Street Advisors, a boutique M&A advisory firm focusing on companies in the lower middle market. At Water Street Advisors, John acts as an intermediary representing business owners who are selling their privately held companies. He also performs buy-side searches for companies and Private Equity firms looking to acquire businesses for their portfolio. Water Street Advisors is a full-service M&A advisor and we focus on bringing sell-side deals to a successful closing from marketing and finding buyers to submission of IOI and LOIs, through due diligence, negotiating purchase agreements and closing. John has over 35 years of financial transaction experience helping companies of all sizes obtain debt and acquisition financing. As a commercial banker for several large regional, and multi-national banks, including National City, PNC, Associated Bank, and HSBC Bank USA, N.A., John’s knowledge of domestic and international financing, credit analysis, cash flow lending, bond financing, and non-conventional forms of financing has helped hundreds of clients obtain the capital funding they needed to grow and prosper. John actively assisted clients on both sides of acquisition transactions with a passion for creating deals that meet the goals of all parties involved - from discussion phases through negotiation, documentation and closing. John has experience in a wide array of industries, including manufacturing, wholesale, retail, franchising, distribution, logistics, transportation, healthcare, service, and not-for-profit organizations. John also served for one year as the Executive Director of the Minority Business Development Agency Capital Center which was charged with helping minority owned businesses access capital for economic and job growth.
John and his wife Karen live in Naperville, Illinois, and their daughter Paige lives and works in Chicago. John is active in many organizations including as a board member and Vice President of The Exit Planning Exchange of Chicago, a former board member of the Association for Corporate Growth, Chicago, and is a member of MBBI and OPUS Connect, and is the Chair of the Business Development TEAM at the Naperville Area Chamber of Commerce. John is also an Alumni Leader of the Indiana University Kelley School of Business Kelley Leadership Network, and a member of a think tank at Faith In Place, which empowers people of all faiths in Illinois to be leaders in caring for the Earth. John is also a Past Grand Knight and 4th Degree Knight of Columbus in KofC Holy Spirit Council 15037 and is a parishioner and Cantor at Holy Spirit Catholic Church in Naperville, IL.
John B. Weber is not affiliated with Waddell & Reed. The information presented is for educational purposes only. We believe it to be reliable, but it is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. Please consult your financial advisor before making financial decisions. Waddell & Reed is not affiliated with any other entities referenced. (07/20)