If you’ve been reading along in this 30 Days to ETA series, you know that in the Day #20 post I discussed how as Acquisition Entrepreneurs you can identify and hire the most vital part of your Professional ETA Team — ETA Business Law. No matter how many jokes you’ve heard about lawyers, good attorneys can save you hundreds of thousands — or even millions — of dollars when it comes time for you to acquire a business (You can read the previous post by CLICKING HERE). Another ETA difficulty is the opportunity to make mistakes. You are going to make mistakes, but how you recover from them will make a massive difference. So, in today’s 30 Days to ETA post, we’re going to explore ETA Mistakes… Enjoy!
At Tip of the Spear Ventures’ Mergers & Acquisitions practice, we have a quality goal – “No Mistakes!” While it’s a great goal to have, as Managing Director I know that it is 100% unrealistic. We are going to make mistakes when we set out to look for businesses to merge or acquire. I like that it’s a high goal, so we’ve kept it from the inception of the practice area.
Mistakes are a part of business. Your ability to risk mitigate, or go into damage recovery after you identify that you have made a mistake, will make all the difference. We also make a habit of backing up and identifying how we don’t make similar mistakes in the future if at all possible.
So if mistakes are a matter of “if” and not “when” for the Acquisition Entrepreneur, I wanted to share in this 30 Days to ETA post some of my most proud mistakes.
You’re going to make mistakes. Your ability to recover from them is the part to focus on.Sam Palazzolo, Managing Director @ Tip of the Spear Ventures
Emotional ETA Mistakes
The seller of a business, be they an individual or a group, is not and does not personally care about your business goals and aspirations, but you do and can often be mislead to believe that they do too. Come time to sign the Purchase Agreement (PA), you’ve put years of blood, sweat, and spears into buying a business based on their value. The majority of your personal worth will most likely be tied up in the new company after acquisition. So, buying it will be hard, scary, and emotionally exhausting. You don’t want the seller to interpret your emotional ups/downs as weakness. Demonstrating a halfhearted attempt to buy a company at your valuation-derived asking price could prove devastating. If you’ve assessed the Minimum Viable Acquisition (MVA) price, you need to stay strong and fight for the price you identified regardless of your emotional state.
The ETA Mistake of Going All-In
Once you provide a buyer’s offer, you can do several things to exude an air of confidence you may not feel. You don’t want to walk into a sale with weakness and work from anywhere but a position of strength. So, what can you do to ensure a successful purchase happens?
- Have courage. – Pull yourself up by the bootstraps, and man up! The minute you decide to sell, jump in or stay out.
- Assemble your Professional ETA Team. – Now is the time to bring in your ETA Professional Team in for some much needed counsel. A well-rounded team will help you stay strong and vigilant during the ETA process.
- Build the Exit Plan. – Choose one of your four professional players to oversee the ETA process with precision.
A Rookie ETA Mistake
As you prepare to show a strong, united front in the face of your potential seller, you don’t want to make rookie ETA mistakes, such as:
- Don’t stop working on other Mergers & Acquisitions deal flow.
- Don’t take any counter-offer just because it’s their first business sale.
- Reign in your eagerness to buy.
- Don’t quit in the middle.
I’ve heard it said that buying a business is 80% emotional and 20% business. As we’ve identified in this 30 Days to ETA post, the largest hurdles you face will be ETA Mistakes that derive from emotional errors. You are going to make mistakes, but how you recover from them will make a massive difference. While you won’t be able to avoid making ETA Mistakes, your ability to plan for the recovery afterwards will be beneficial.