TLP386: Mergers and Acquisitions For Dummies with Bill Snow
Bill Snow, Author of “Mergers and Acquisitions for Dummies.” shares the business valuations and the importance of understanding EBITDA. He also talks about the challenges and misconceptions of making acquisitions. Lack of planning, communication, and dishonesty can derail transactions in terms of negotiations and finance. He also counsels entrepreneurs to monitor cash flow statements while managing their companies. Regarding acquisitions, Bill advises meticulous preparation and deciding before placing a bid on a company whether an acquisition is a need or a nice-to-have. Key Takeaways: [3:13] Bill talks about the nature of mergers and acquisitions, the price terms and timing, and the payment structure such as the EBITDA. He also explains its usage and how it doesn’t work with other circumstances. Bill discusses that EBITDA works different from company to another. [10:47] He shares the three segments of mergers and acquisitions which are the search, negotiate, and finance. As he explains, finance is the easiest among the three, since you can just borrow or get other investors to suffice your needs. The second one is negotiating, which he defines as the most interesting part if only one is familiar with his/ her actions. The last one is search, which enacts you to look for a company that will buy. He added that one thing to differentiate you among other business people is creating a thesis or proposals to discover what’s in it for your business to spark. [15: 08] Bill shares how to make contact and build relationships. He also speaks about how to use deliberate and intentional approach in establishing peer-to-peer relationships. This explains the expectation one should be thinking of when entering this kind of business, where you will be negotiating with five people, but only one will win the deal. [18:07] He explains the need for an accountant to discover the preferred structure for the seller to effectively communicate to the buyer and the importance of disclosure of problems to frame discussions to avoid resulting in a much bigger problem. Bill also explains how important it is to be honest with even the smallest problem because it might result in a bigger problem if not solved earlier. [21:44] Bill shares how important math is when it comes to leadership, the same with how business and math is interconnected as well. He also emphasizes the need to be confident in terms of their businesses because they have learned about it in the first place. In addition, it is also recommended to study other companies with the same company as yours for you to be able to understand and create a better strategy. He also added how important it is to work with a financial advisor instead of going with the flow. [26:27] He explains the importance and concept of timeliness and due diligence in integrating acquired business. Bill also shares how imperative it is to understand your strength and weakness when doing transactions to determine where you are good at for you to improve what you are lacking and enhance where you are better at doing. [38:32] Closing Quote: Remember, get your facts first, then you can distort them as you please. -Mark Twain Quotable Quotes: “The way a business is valued from a buyer's perspective is quite different from how people run their businesses.” “Put together your plans, get very granular to make acquisitions.” “Don't ask. Offer something. Try to figure out what you can offer.” “A small issue that may not be a big deal for most people, if hidden, may result in a bigger problem.” “Fix what you can and work with a financial advisor instead of finger up in the air.” “The key thing with investment bankers advisors is their ability to negotiate.” “The most important things are the ability to negotiate and the ability to get a transaction done.” “When you have something in due diligence, get it done in a timely fashion. It will take a couple of years before a company finally came back enough, and it traded.” “You're going to have some rough waves, and some people may not work well with you, you have to get rid of them, or they'll leave. But you'll be surprised, other people who are kind of off in a corner, forgotten, turn out to be rock stars” This is the book mentioned in our discussion with Bill Snow: Resources Mentioned: The Leadership Podcast | Sponsored by | Rafti Advisors. LLC | Self-Reliant Leadership. LLC | Bill Snow LinkedIn | Bill Snow Website | Bill Snow Twitter |