In the movie, Invincible, with Mark Wahlberg, there is a line “Let’s go, gentlemen, find another gear.” That line is inspiration for today’s writing on transaction work. During 2024 I wrote two articles on exit strategy. The first, A Word About Exit Strategy, focused on options the seller has when deciding upon to whom they should sell. The second, More on Exit Strategy, was about value drivers. Today, it’s about the nitty gritty of transaction work itself. My experience is that transaction work moves (or at least it should) at a different pace than most people are accustomed to operating. It’s faster paced often not taking time off when there is pressure to get across the finish line, more intense, can be more blunt or adversarial with big dollars on the line, and more technical in nature needing input from multiple advisors with expertise in various areas. If you’re a buyer or seller and going to engage in transaction work, then you had better step up. Either that or let the professionals run the show.
A few weeks ago, I had a client buying a business from a private equity firm and we were down to negotiating the working capital target just a few days before closing. This issue had been a bit contentious for a while. The seller (not so politely) suggested I didn’t know what I was doing when I explained my approach. I knew what I was doing, I was taking an aggressive position, as I would argue his side was as well. The result was a downward adjustment to the purchase price of 4% just days before closing. I didn’t take offense at his remarks. We took the 4% and called it a win.
A colleague of another client recently called and explained that he didn’t know how to value a small acquisition as he was coming up with a value of just $300,000. I responded with, “You’re wrong. You do know how to value this company. I get to about the same amount.” We went back to the seller and were immediately rejected. They took offense. But they called back a few days later wanting to talk. Unfortunately for them, they didn’t create anything of significant value with their life’s work. They had simply created jobs for family members. Nothing wrong with that; it just doesn’t warrant a big payday.
Years ago, we were in protracted negotiation on a purchase. It was late Friday afternoon when we took a break from a call with the seller. Tired of the lack of progress, I suggested that our team call our wives to tell them we won’t be home for dinner and then tell the seller we get this done tonight or we walk. Toward the end of the next call with only mediocre progress the seller suggested we call it a night and pick it up on Monday morning. I said, “There is no Monday, there is no tomorrow, we come to terms tonight or we walk”. The seller wasn’t happy, but we came to terms that night.
I could come up with dozens of transaction stories from over the years, but I keep these articles short so am limiting it to just three examples.
While I don’t love reading detailed legal documents, I do enjoy the nature of transaction work. Think of it as a playoff or championship game as opposed to regular season.
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]
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your cash is flowing. know where.®
Ken Homza
Copyright @ 2025 Kenneth M. Homza