A Recent Experience in my role as sell-side advisors
Just a few days ago, I dealt with a group of investors interested in acquiring and partnering with one of my larger medical groups being their sell side advisor. Despite my transparency about our process, one of the partners became disgruntled due to the emergence of other competitive bids. This individual resorted to bullying, expressing frustration over the pressure he felt after submitting a very loosely defined Indication of Interest (IOI) compared to the detailed Letters of Intent (LOIs) and presentations from other parties.
This behavior was a significant red flag, particularly for a potential partnership. Bullying is counterproductive and detrimental to any buyer, especially when considering a partnership with the business owner. This incident prompted me to write this article to highlight the negative impacts of unprofessional behavior. While such instances are rare in the professional finance world, it's important to address them. Occasionally, some investors believe their financial power entitles them to strong-arm their way into deals. Enjoy the read, and I invite you to share your similar experiences.
1. Building Professional Relationships with sell-side advisors
M&A intermediaries, including investment bankers, brokers, and advisors, are crucial to the transaction process. Bullying these professionals can severely damage relationships, leading to a lack of cooperation and reduced motivation to ensure a successful deal. Upholding professionalism fosters positive working relationships, which are essential for navigating the complex and often prolonged M&A process.
2. Leveraging Information and Expertise
Intermediaries hold valuable insights and expertise regarding the market, potential targets, and deal structuring. By treating them with respect, buyers can gain better access to crucial information, receive tailored advice, and stay well-informed throughout the transaction. In contrast, bullying can lead to intermediaries withholding critical information or not putting forth their best efforts.
3. Maintaining Reputation and Facilitating Future Deals
The M&A community is relatively small and tightly knit. Buyers known for bullying intermediaries can quickly earn a negative reputation, making it challenging to engage with other professionals in future transactions. Building a good reputation based on respect and ethical behavior enhances a buyer's market standing and facilitates smoother future deals.
4. Improving Negotiation Dynamics
Successful negotiations require collaboration and mutual respect. Bullying intermediaries can create a hostile environment, turning negotiations adversarial rather than constructive. This can result in less favorable terms for the buyer, as intermediaries may be less motivated to find creative solutions or concessions.
5. Ensuring Transaction Efficiency
M&A transactions involve numerous steps, including due diligence, valuation, and integration planning. Intermediaries help coordinate these activities and ensure the process runs smoothly. Bullying can disrupt this coordination, causing delays, miscommunications, and increased transaction costs. A cooperative approach ensures greater efficiency and a higher likelihood of closing the deal successfully.
6. Upholding Ethical Standards
Respecting intermediaries aligns with ethical business practices. Bullying and aggressive behavior are not only unprofessional but can also cross ethical boundaries, leading to potential legal and reputational risks. Maintaining high ethical standards reflects positively on the buyer's organization and fosters a culture of integrity.
7. Maximizing Deal Value
Intermediaries are adept at maximizing the value of a deal for both parties. By working collaboratively with them, buyers can ensure they achieve the best possible outcomes. Bullying tactics can backfire, leading to a suboptimal deal structure or missed opportunities for value creation.
Conclusion
In the intricate world of M&A, intermediaries play an essential role in guiding transactions to successful completion. Treating these professionals with respect, professionalism, and collaboration not only enhances the buyer's chances of achieving favorable outcomes but also builds a positive reputation and fosters long-term relationships within the M&A community. Conversely, bullying can have detrimental effects on the transaction process, the buyer's reputation, and future business opportunities.
About Dr. Allen Nazeri
Dr. Allen Nazeri, known as "Dr. Allen," brings over 30 years of global experience as a healthcare entrepreneur. Currently, he serves as the Managing Director at American Healthcare Capital and the Managing Partner at PRIME Exits. Throughout his career, Dr. Allen has provided strategic growth consulting to leadership teams of both privately held and publicly listed companies, ensuring their readiness for a successful exit.
Dr. Allen holds a Dental Degree from Creighton University and an MBA in M&A and Investment Banking from the University of Bedfordshire. He is also the esteemed author of "Value Engineering: Strategies to 10X the Value of Your Clinic and Dominate the Market!" as well as his brand new book, " Selling your company at a premium", As part of his services, Dr. Allen offers a Free Valuation to business owners preparing for a partial or complete exit strategy. Leveraging his extensive network, Dr. Allen collaborates with numerous strategic buyers, private equity firms, and a select group of institutional investors seeking high-quality healthcare investments. Remarkably, he takes direct accountability for the successful sell-side representation of nearly $750M in enterprise value annually.
To contact Dr. Allen, email him at Allen@ahcteam.com or Allen@pexits.com.
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