Mergers & Acquisitions by Dennis J. Roberts

Author:Dennis J. Roberts
Language: eng
Format: epub
Publisher: Wiley
Published: 2010-05-11T04:00:00+00:00

Is there a lesson here? Absolutely! These clients and the buyer, who, as I said, was in the same industry, had long since had grown accustomed to doing things their own way. They operated in a rough and tumble culture that celebrated stubborn independence and refusal to cede much authority even to trusted (but mere) advisors.

Business intermediaries often make serious mistakes when assuming in a rigid God-like manner that they and only they know what is best for their clients. Good intermediaries offer advice because that is what they are paid to do, but they also acknowledge that clients may choose to ignore that advice and pursue an entirely different course. When the client decides to “go his own way,” assuming the way is at least ethical and legal, the intermediary needs to demonstrate sufficient flexibility to go along. Back in that noisy meeting room, the author’s younger self apparently had not had enough investment banking experience to adapt to clients who seemed to him to be doing everything wrong. And interceding to bring a stop to the apparent chaos only succeeded in compounding the clients’ lack of respect for this investment banker who just did not “get it.” Life is a learning experience, I guess.

Looking back over the years, it seems clear that these clients, in fact, were particularly well-suited to representing themselves in negotiating the sale of their business (and the author was just along for the ride in support mode). These clients were so effective, in fact, that I find it all-but-impossible to claim that I could have negotiated a better final financial outcome than they had done for themselves in closing the deal. These clients had needed nothing more than technical advice. They had become excellent negotiators in their own right because negotiation played a significant role in their industry, where survival required great shrewdness in the face of narrow margins. What I failed to realize was that it was my job (with this particular client) to provide certain technical advice and then to bow out to a degree, while remaining fully cognizant of all proceedings should the clients signal further need of advice with other technical issues.

A little humility, one eventually learns, can take an investment banker a long way. When a client appears to insist that he can “drive” the transaction and demonstrates most of the requisite skills to do so successfully, let the client have the keys and get in the passenger side of the car. There’s plenty of work to be done as the co-pilot. And, of course, the fees for riding along already have been agreed upon.

An investment banker’s job is to collaborate with clients while playing a role that very likely will change from deal to deal. This is why the investment banker checks his ego at the doorstep of each new transaction engagement. It is, of course, his obligation to determine whether and to what degree his client can or cannot “drive the deal” and communicate his best advice accordingly.

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