DEAL DESTROYERS AMONG US!!! Yeah. Common catastrophe: failure to research the in

DEAL DESTROYERS AMONG US!!!

Yeah. Common catastrophe: failure to research the interests of every decision maker on the other side. (Ignorance) usually caused by Selfishness. Laziness. Wishful Thinking. (and outright lack of intellectual capacity.)

Lawyers are the WORST at f__king up deals by the opposite means. On the scale of risk protect us from likely scenarios, but do not burden us with constraints. This is unwise. Stop them.

Middle (and senior) management folks are too often enthusiastic imbeciles trying to stroke their egos and careers and get attention by demonstrating their ‘value’. This is unwise. Stop them.

Most of the time ignore your lawyer, and listen to your finance guy (assuming he’s skeptical). Your finance guy will try to show his cunning by seeking extra profit somehow. This is unwise. Stop him.

Ask your sales people (not marketing). Even though they are largely blabber-mouths, sales people are in the business of determining incentives.

Learn basic Austrian economics (incentives of rational choice: marginalism, subjective value) and micro-economics, as well as finance and the first two years of basic accounting.

Learn how to write your own contracts. It’s just like programming really. There are design patterns, functions, objects, etc. “Simple-er is better-er”. Give lawyers your draft to start from. Try to cut everything they add unless they can justify it to you.

In a business deal, if you do not want it on the front page of the NYT, then don’t do it. It will f__king haunt you, and you deserve it. My position is to hold the moral high ground no matter what. We all screw up. But there is no down side to doing the right thing.

EMPHASIS ON M&A DEALS:

Furthermore the secret to M&A deals:

(a) companies have no objective value – none. Numbers are meaningless.

(b) the price of a business is what it requires to tip the decision makers.

(c) very often that price is lower if liquid, higher if not, and more often money is a secondary concern.

(d) the cost is determined by the impact of the effort to merge the business cultures and processes.

(e) use relationship building, time to comfortably adapt, and abstract goals to do it rather than micro management and detailed top down planning.

(f) every manager’s opinion of staff is the opposite of factual value, since managers are mostly dead weight and rely on staff for upward processing of information. Mergers are good opportunity to give hidden talent room to innovate. Look for it.

(g) a low end venture capitalist is looking to create addicts. They will very often burn shareholders, staff, management and founders. You are a ‘drug user’ they are trying to hook while you are in startup mode. Once you have value you are a debtor (addict). They will treat you like one the moment they prefer to exit. (No, not the big players, which is why you want them, but many of the rest. Selling money in an investment hierarchy and selling drugs in a distribution hierarchy are similar business models. )