I will admit I enjoy the art of the deal very much. Putting deals together, the negotiation, the due diligence, the renegotiation, and everything that it takes to get a deal across the finish line to a completed merger or acquisition. That is fun.

Often you see success as getting the deal closed. But I’ve seen over time that often success is helping your client avoid the bad deal. Letting a deal die because it wasn’t going to end well is often the best for both parties.

That happened last week. I was advising a seller who wanted to maximize the selling price for sure and exit the business.  However, this seller also cares very much about what happened to the business after the closing and the legacy of success being continued.  In round after round of due diligence requests it became apparent that this buyer had gotten lost in immaterial details of the companies history and financial results, but wasn’t asking any questions about the future (or really the present) and was not spending any time on thinking about how to grow, much less maintain the business after closing. It wasn’t going to be a success.

Good transaction work does the due diligence to ensure the cash flows the buyer is expecting are real, that contracts are valid and assignable, that the company doesn’t have problems with its intellectual property rights, that there is not a minefield of employee relations or tax issues that will come around to bit the buyer in the future.  However, good transaction work also ensures that the buyer understands the business they are buying and has a plan for addressing the employees the day of the closing, for operating the business the day after closing, for growing the business during the 100 days after closing, and for the capital needs in the years after closing and has thought through the moves that will need to be made when the inevitable changes occur that throw that 5 year plan into obsolescence.

Often the best work is done on deals that don’t close and helping a client spot a potential disaster and walking away is just as valuable as helping get a good deal closed.  Sometimes that disaster can occur because of business issues, but it can also be because the buyer is not right for the business.  This business will sell and making sure it sells to the right buyer and at a fair price to the seller is success.