'Time' is a soulful 90's tune by Hootie and the Blowfish with poignant social commentary. Darius Rucker and company likely never intended for their lyrics to be included in some investment banker's blog. Those guys should be more forward thinking!
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| Hootie & the Blowfish |
"Time
Why you punish me
Like a wave crashing into the shore, you wash away my dreams.
Time
Why you walk away?
Like a friend with somewhere to go, you left me cryin'"
Applied to the context of an investment banking transaction,
time is no friend at any point in the process.
And, as my friend Ned says of his golf game, 'less bad things happen when the ball is on the ground,' the same can be said for this process, marked by the period between when you decide that now is the time - the offer; and the time when the transaction concludes - the payoff.
Everything that occurs between those two bookends must happen as efficiently and expeditiously as a rationally motivated person can make happen. That process is complicated; littered with snake pits, quicksand and dead ends; full of distractions and discouragement. And for crazy people like me, it is that challenge of finding safe passage and order when there appears to be none that is most rewarding.
This process can be thought of in four steps: preparation, the promenade (a great southern word) , the proposal, and the payoff. If the payoff is indeed the goal; eliminating non-productive time between the offer and the payoff must be the focused objective of both the business owner and his adviser.
The theme here is not that rushing carelessly is good; rather that meandering casually isn't. Be deliberate. Be responsive. Be forthright. During preparation period, when your company material is being consolidated into an offering memorandum - hustle. That creates more time for perfecting the document so that your company is presented in the best possible light. During the promenade, when your company is being actively marketed, potential investors determine their interest and decide whether or not to make a proposal. They will have some clarifying questions; respond promptly. They are trying to get to a yes or a no on whether to proceed. Yes is good, a quick no can be just as good because it does not consume more of your time if they are truly not a good match. The timeliness and quality of your response speaks volumes about both your commitment to the process and your operational efficiency. For the proposal, papering a buyer's and a seller's intent into the legalese contained in the definitive closing agreement can be tedious...i.e. time consuming. A good adviser will insist that milestones from the commitment represented in the LOI (letter of intent) be achieved to continue the process to closing.
What is a reasonable amount of time for the due diligence process and creation of the definitive closing agreements? It depends. How easy is your business to evaluate financially and operationally? If your financial house is in order, as I suggested was absolutely critical in an earlier post, that piece can move forward more quickly. Same on the operational side. If not; both take longer and in some cases considerably more...time. That time added to due diligence adds transaction risk and is avoidable. Transaction risk likely delays and potentially reduces the payoff - contrary to the goal. Manipulating a due diligence timeline with artificial constraints can be attempted, but those results likely will be undesirable both for the seller and the buyer. The mission is to reduce risk which is best done by having the proverbial house in order before the company arrives.
The name of Hootie's album, prescient for transactions scuttled by inefficiency and lost time - 'Cracked Rear View'.
Time waits for no man.
