It’s easy to forget that just a few months ago, we were all monitoring a flurry of mergers and acquisitions activity that signaled good economic health. But then the coronavirus arrived, impacting nearly every aspect of our personal and professional lives. Some sellers pressed the pause button on deals in hopes of obtaining pre-COVID valuations; buyers, on the other hand, wanted assurances that all lost business would return.
For others, like Kevin Mullaney, CEO of PDF Print Communications Inc., certain transactions were too good to abandon. In September's cover story, I explored the thought process behind Mullaney’s (and others’) moves, along with the pandemic’s effect. While things remain in flux, there are glimmers of hope for the future when it comes to M&As.
As Casey Campbell, president of PathQuest Group Inc., a private consulting and intermediary firm serving the print and print distribution industries, told me, activity is picking up. In fact, Campbell has signed three listing agreements in the past month. That being said, there is nothing easy about this process, much of which is discussed in the feature. I’d like to use the space here to recap four common errors Campbell sees companies make. Give them a read. Knowing this information upfront could save you a lot of headaches … and money.
Among the biggest mistakes we have observed are:
- Not researching what similar businesses are selling for, thus leading to the potential of an inflated value expectation. We go to great lengths to explain to our clients, that are sellers, what motivates a buyer and how they are thinking.
- Sellers not having a preplanned exit strategy. They may be leaving money on the table for the buyer to earn in future years.
- Letting emotions gain the upper hand in discussions—at the end of the day, this is a business transaction.
- Not understanding [early on] the amount of work that is required in due diligence.