The Key to the Deal
YPO members share their thoughts on that ‘one thing’ they always look for in a potential deal
Millions of deals are made worldwide every year. For the savvy deal maker, is there one element in a deal — or in a potential partner — that has to be present for the deal to move forward from the initial pitch? YPO members shared their thoughts on what they look for in a potential deal that makes them believe it will have a successful outcome.
It’s a matter of trust
“Trust between parties can make or break deals. When advising a seller, one of the first questions I ask is how much time he has spent with the buyer and what kind of rapport they have. His answers more often than not determine the tone of the negotiation process, as parties that have higher trust levels are more willing to make compromises and find common ground. In the days leading to closing, when the hardest issues remain on the table and tensions are mounting, underlying trust between the buyer and seller is crucial to breaking the impasse and bringing the transaction to a successful completion.” —Chris Rose, Chair, YPO Deal Network
It’s what you buy
“I have to believe that I am buying well. More money is made on the buy side than ever on the sell.” —Gregory King, Director of Ascot Capital Ltd.
Will the deal close?
“It would be convenient if there was just one thing that predicts a successful outcome in M&A deals, but I don’t find that to be the case. However, there is an important element that is essential to keep your eye on and that is the probability of close when choosing a buyer/target. Too often, people are caught up in the price, which is material and can solve many issues of course, but a poorly supported high price may fall apart or become re-traded (reduced) later in the process. If you’ve chased the high price deal, your other options may be damaged by the time you realize that this offer is not viable or is weaker than you thought originally.” —Janice Anderson, CEO of Niviera Co.
It comes down to the team
“The one thing I look at in a potential deal is the people — what’s their expertise and how hungry are they to achieve their vision. I believe a deal will have a successful outcome when it involves the right people with the right intention, expertise and vision.” —Fred Mouawad, Founder and CEO of Synergia One Group of Companies
“I truly believe what matters most for a deal to be successful is the team. For a deal to work, the venture has to be within an industry with a potential for growth. The company needs to have a sound business model and the funding to implement it. To ensure long-term value, the venture needs a proprietary technology or a differentiating element that builds barriers to entry. However, as much as all of the former are requirements for a deal to work, they are not enough. The entrepreneur and the team that lead the venture make the difference. A successful outcome of a deal depends on the energy, the commitment and the passion of the team.” —Maria Eugenia Giron, Executive Director for IE Business School Premium and Prestige Business Observatory, independent director and angel investor
“The first thing I look for in a potential deal is a talented, passionate and high-energy person on the other side. Poor execution is the death sentence for even the best deals, so I bet on people rather than business concepts or ideas, especially if I am a passive investor.” —Stephen Forte, CEO and Chief Scientist for Collar.Tech