Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

December 9, 2014

No Motivation – No Deal

By Joseph Eneldas

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As the year draws to an end, it is interesting to review our investor inquiries and deal flow in 2014 in order to identify some of the contributing factors that left some business sellers, as well as investors, without a deal. Most significantly, one factor is the outstanding one: motivation – or better, the lack thereof.

There is no question that in these times of ever-increasing desire for instant gratification, a lot of folks simply do not set sufficient time aside to properly position themselves for a deal – on both the buy and sell sides!  “History has shown over the past thirty years,” says Achim Neumann, President, A Neumann & Associates, New Jersey, “that it takes, on average, a year to sell a business, and a little bit more on the buy-side to find the right business. There are no short cuts.”

The number of buy side folks, induced by the simplicity of clicking the “More Information” button on a variety of business brokerage websites, and then never following through with their request, is staggering. Whereas such percentage has hovered around thirty percent ten years back, now the number of people requesting more investment information, but then not following through, is rapidly approaching seventy-five percent.

How does this trend relate to motivation?  It can certainly be argued that such buy-side folks never had a sincere interest to pursue a transaction.  More alarmingly, an even higher percentage of would-be investors are neither willing to sign a standard non-disclosure agreement or to provide any information to demonstrate their capacity to execute a deal.  One can almost come to the conclusion that in these times of “everything is free on the web,” investors expect detailed information about specific mid-sized business to be open and accessible to even the most casual observer.  (Unwilling to reinforce this perception, our firm will never release information without the proper documents from the buy side.)  No motivation, no deal!

How does the sell side fare?  Not much better, unfortunately.  “With the economy improving,” says Steve Wrubleski, Managing Director, Southern New Jersey, “we are being approached by an increasing number of sellers/business owners who are very much challenged to communicate the true reason for their desire to sell.”  Indeed, the goal of a business owner in his/her mid-forties to “retire” carries very little credibility with buyers on Main Street (possibly in Silicon Valley, though).

More often, it is being tired of the day-to-day business, financial woes, or some other short-term issue that has the business owner approach us to seek a sale.  But does this truly constitute an appropriate motivation?

As soon as the financial challenges subside, or a long overdue vacation has brought back some “healthy distance” from the business, the business owner’s world looks much brighter, and a sale of the business has declined substantially in priority – until the next short term challenge arises.  Does that make for a motivated seller?  Of course not, and so the same applies: no motivation, no deal!

Ultimately, many factors are easily quantifiable in a business transfer: valuations, cash flows, market share, personnel quality and growth prospects.  Very often, business people on the buy and sell side have a surprisingly similar assessment of such factors.

However, of the non-quantifiable factors, such as chemistry between buyer and seller, synergy among merged businesses, etc., it is the lack of motivation that more often than not will prohibit the final execution of a deal.

It’s simply true: no motivation, no deal!

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
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