Mistakes are inevitable when beginning to navigate the world of mergers and acquisitions. However, as someone who is experienced in both law and business, Laura DiFrancesco offers a few mistakes that can be avoided when buying a small business. You cannot view business transactions similarly to other transactions, as there are many additional elements to consider: the transfer of operations and key employees, maintaining finances, gathering bank information and other logins, and more. It is important to note, that this cannot be done using one generic template. Every transaction is unique and takes proper diligence to guarantee a smooth transition.
What You’ll Learn
You cannot use a template to acquire a business.
// There is not one specific template that works for every business transaction; they need to be customized based on the transaction’s condition.
You have to understand business operations.
// M&As function differently than other transactions. You have to be aware of ownership consent, transition of bank information, accounts payable and receivable, logins, and more!
Do not overpay for the business.
// Although it is a rare occurrence, you want to be sure that you thoroughly consider your working capital, credit, accounts receivable, etc. so that your business can stay afloat.
You have to have a proper integration plan.
// A business will not transition smoothly if there are discrepancies within the directors, officers, and employees; as well as the ownerships of keys, accounts, passwords, stocks.
Consider the human element of the transition.
// Understand the key employees and establish an employment agreement, incentive, alignment, and contracts to guarantee well-running operations post-close.
You have to be aware of the time commitment.
// The due-dilligence time period takes time and attention, and it is important to stay on top of the work so that the deal can close in a timely manner.
Episode Highlights:
[00:00] Introduction to Dealmaking with Laura DiFrancesco
[01:17] Resources for Navigating A Business Transaction
[03:23] First Mistake - Relying on a Template
[09:36] Dean Street Law
[10:34] Second Mistake - Not Understanding Business Operations
[14:31] Third Mistake - Overpaying for the Business
[17:21] Fourth Mistake - Lack of an Integration Plan
[19:15] Acquisition Insights
[20:14] Fifth Mistake - Ignoring the Human Element
[21:26] Sixth Mistake - Not Understanding the Time Commitment
[24:27] Outro
Resources Mentioned
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Credits
Host // Laura DiFrancesco
Executive Producer // Teagan Rowland
Editor // Jules Bernardo
Associate Producer // Jules Bernardo
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