…unless you really know what you’re doing!
Over the last couple of months (but more so over the last week or 2), I’ve received a LOT of personal messages regarding Mergers & Acquisitions.
Now for transparency, I don’t sell or teach M&A, I just do it myself. It’s a super effective tool when you get it right. I’ve bought over 10 bizzes over the last 4 years and currently have 9 companies in 3 different Groups.
Basically, I’ve been through the ringer with M&A. And as I always obsess and go head first into everything I do, I’ve made EVERY error you can make in M&A. I’ve had every type of problem you can think of from people owing me 6 figures, acquisition staff quitting the second I buy the biz, clients and staff being stolen post buy, messy mergers, stupid acquisitions, co-Directors stealing money from me, ex Directors stealing the list, people lying in every facet of the biz and I even bought a new biz 2 weeks before lockdown…doh!!!! This is just a small list of hiccups I’ve dealt with by the way.
But basically, the point of this post is that I would STRONGLY recommend to NOT do any biz buying for the foreseeable future!
Seriously, don’t do it.
Not unless your EXISTING biz is running autonomously by your management team, your biz is in a sector that isn’t affected by the bollocks happening in the world right now, you have good cashflow surpluses AND the potential acquisition is CONGRUENT to your existing biz and that the acquisition will very quickly help both bizzes….and it’s a good deal where the asking price can be nicely covered by the monthly cashflow from the acquired biz and that you have a profit-clawback clause in the deal so that any skeletons in the closet reduces the monthly payments etc.
As you can see, with that criteria, M&A is NOT something for most people to do. But even if you do match all of the above, I’d still highly recommend you hold fire. Simply because:
1.) The world is NEVER going back to a pre-lockdown state. This IS the new paradigm. Just like X ray scanners became a permanent fixture in airports worldwide after 9/11 along with CTC and AML checks, this new world is about to have its own bunch of ‘temporary measures’ that will become permanent. This is a big rabbit hole we won’t go into now, but it’s going to seriously affect retail, hospitality and travel bizzes forever. So for the love of Elon, avoid those sectors with a barge pole.
2.) It still buggers me senseless how the vast majority of the public have ZERO idea of what’s actually happening in the global economy right now. They look at rising stock prices and think everything is rosy. But it’s not. I’ll post a YT video in the comments which explains this more.
3.) There is an impending continuation of the crash that started in March. This continuation will take out those March lows and fall a LOT lower. This is an incoming tidal wave of pain coming for those holding stocks, pension funds or any type of funds. Even Gold, Silver and crypto will take a tiny tumble to begin with. When this happens, most bizzes will be affected. You sure you want to buy a new biz with this in the near horizon?
4.) During and post crash, we will see a complete re-jig of the whole global financial system. This isn’t hocus pocus, it’s already happening. It’s just not in mainstream media yet as it’s too busy scaring you with other news for now. In this new financial system, we have NO IDEA (no one does) of how this will affect the business landscape.
I could go on, but I don’t want to depress or bore you. Long story short, just sit on your hands for the time being. Wait until the dust has settled and we can do a more accurate Battle Damage Assessment on the biz ecosystem. This is why I’m not doing any M&A for at least the next 2 years. Even though there may appear to be some good deals on the market right now. Trust me, those deals will get a LOT better once all this bad stuff plays out…
Also if you do see a pukka deal right now, just ask yourself if you really need it? The barrier to entry of bizzes these days is so low. You need to ask yourself if you can just do what the target biz is doing without buying it. For example, a friend recently bought an online shop. They basically bought the online assets like a website etc, but it didn’t have many online sales or much of an online presence and also bought a whole load of stock. In this case, it would have been better just setting up your own shop from scratch, buying the stock from a wholesaler and then doing it yourself.
Anywho, hope this helps at least 1 person press pause for the moment.
Please bear in mind that I’ve made all of these mistakes and more in M&A DESPITE being an experienced biz owner to begin with.
If you have never run a biz successfully before, getting into M&A is just asking for a face slapping! Hope this helps!