Every few years a remarkable buyer pulls the wool over everybody’s eyes on the sell-side. Their apparently audacious goals, suggestions, and demands are refreshingly positive. There are no hurdles to stop them. They act with authority, profess goodwill (often with a dash of religion), and dismiss with disdain any question of financial barriers. In short: they will talk a good fight, appear to know a great deal, and claim great resources.
Who wouldn't want to be merged with these guys?
I once introduced one such buyer to the seller of a fantastic manufacturing business. The buyer was a chartered accountant, married to a lawyer, with letters of credit amounting to tens of millions. We had an enlightened conversation in the board-room of the company which went well. After an hour he asked to go to the bathroom.
When he came back a few minutes later he announced: “I really like your bathrooms. I will by your company at your price. Please draw up the agreements.” It was one of those moments one never forgets.
I emailed him draft agreements two days later with a suggested due diligence structure. There was a bit of back and forth, and the next week both buyer and seller signed the agreement.
And then the “what for”, and “how’s your father” started. To be clear, he never actually cancelled or challenged anything about the deal. He always answered his phone, but the goal posts moved and moved and moved.
Some months later the seller cancelled and called it a day on the deal. The world was moving at speed into the Global Credit Crisis, and other things became more important.
In writing this I ran a quick google search on the man. It turns out that he has destroyed 3 major companies through M&A activity. He borrowed more than R100M from a foreign development fund for the deals but appears to have paid for nothing. The final nail in his solvency coffin was an accumulated liability of almost half a billion Rands across a conglomeration of acquisitions.
Also on the internet is this comment from an unhappy associate: “PLEASE BE CAREFULL WHEN AND IF YOU DO ANY BUSINESS WITH T%$#@ C&*^%. THE OWNER AND OPERATOR, MR &$#*@ IS A DECEITFULL, LYING, FRAUDSTER”.
The special characters are mine as I don’t want to be sued by somebody who may or may not have R100million squirreled away somewhere. And you can go do your own Google search on the sentence.