Forgoing the M&A process can be a long and tedious experience that can leave a bad taste in nearly anyone’s mouth, especially if that individual is not properly prepared for the questions that will be asked. It is important for the seller to understand that the buyers is going to ask many questions that will require detailed and meticulous answers. The logic behind the questions is not to interrogate the seller unnecessarily, or to embarrass the seller for aspects or business opportunities he or she may have missed. The questions are simply to help the buyers understand the business as thoroughly as possible in order to help them understand what they can do and will do after the transaction is complete.
Understanding the Buyers in an M&A Deal
Understanding the buyer will help the seller to stay focused on the important points within the transaction and avoid letting emotion frustrate the deal. It is vitally important that the seller disclose accurate information in the first discussions with the buyers. When a Banker is working with the seller most of the questions will be asked up front, however, many of the details will not be discovered until the due diligence phase. If the information disclose in this phase is not accurate then buyer will be mislead in estimating the business’s worth. This can be detrimental to the deal’s closing success.