Got an M&A Situation?-How to Escape The Friendzone
A common scenario that we encounter in the business world is that there is an owner who’s received an expression of interest from a peer or a competitor. Oftentimes, this is someone that they have known and associated with for years. The scenario goes something like this, “We got to talking about it and the transaction just makes a ton of sense. They have X, and we have Y, and together it’s a no brainer.”
Awesome. But as a practical matter we often see these things drag on forever without moving forward. Everyone is happy, and everyone kind of wants to get together, but neither party is willing to lay it out there and say what they really want.
You know what the young kids call this? The Friendzone.
Whats Wrong With the Friendzone?
Well, nothing. I mean, it’s the status quo, right? Things are comfortable. Things are the way they always are. But that’s the problem – at least one party doesn’t want to be just friends. You are both wasting time and energy flirting with the idea of moving forward but never making any real progress. To get out of the friendzone you’re going to have to do a few things…
If you are serious about getting a deal done, be honest. Have an open discussion with your partner and let them know what you are looking for. M&A deals can take a long time, involve a lot of different players, and can be fraught with acrimony if they go the wrong way. To help sidestep these problems, work with your partner to create a framework for discussions – and constraints to help hem them in.
- How long will you spend in negotiations?
- How long will diligence last?
- Who is going to present an offer? Counter offer?
Get formal quick
The worst thing about the friendzone? It can feel like purgatory. You’re really in “no man’s land” and have no idea when you are getting out. So be grown ups. Instead of having endless meetings and dinners talking about how great things can be, talk price. Why? Because price is the one thing that separates dreamers from doers.
Design a framework for discussions
If you’ve been close with the other party for some time it can be difficult to be open about these things. Consider bringing in an outside advisors to help manage the discussions. For instance, an experienced M&A intermediary or transaction attorney can be invaluable in guiding discussions and maintaining a buffer between parties.
Get Some Closure
The friendzone only exists if you allow it to. One of you must be bold, be brave, and lay it out there. If you want to merge together then propose your plan, negotiate the details, and make your happily ever after. If your partner’s intentions are not as sincere or you just can’t find terms that you both agree upon, then it is time to move on. Either way, you will have closure and have escaped the friendzone.