For a long time Berlin based B2C Startups were apparently never founded without taking a quick trip south of the Alps to find inspiration on a smart company name over buffalo mozzarella and Rosso Nero. Since investment banks are expected to be quick and effective on the one hand, but also solid and loyal as a Kings’s knight on the other, company names diverge in between tech-transaction specialists with an anglo-saxon influence on the one hand and those stressing the solidity aspect, hoping to score with more industrial, small/medium companies, on the other. These are the romans and greeks amongst corporate finance advisers. From some point onwards, a company name becomes a brand. Up to that point one needs to live with one’s decision.
As to my own latin classes in school…well, enough remained to remember a few of the great orators and, vaguely, speeches. Also enough to let me think in that direction. While there is no need to burden posterity with the creative processes I engaged in to find my own company name, I am still rather fond of the original quote attributed to Seneca: „filosofia non in verbis, sed in rebus est“, thus that deeds are far more important than words.
Two of reasons where clear to me back then (apart from the fact that I have been reproached for not being the most talkative in private). One being that I always belonged to the advisers that stressed succesful transactions over smooth marketing and the other, that transactions are also, and that to a significant degree, about a company‘s core: core business, core competitive advantages and core performance, in other words: about „in rebus“ (this said, the good adviser will always strive to highlight chances and potentials).
On a purely linguistic level I only lately learned that the latin „filosofia“ was obviously derived from Greek, where „filea“ means „love“ and „sofia“, as it happens, „wisdom“. Not that I am keen to continue much further along this line of thought but it did struck me again recently how the participants in a transaction are dependent on pursuing a common philosophy
Company transactions are – as also stressed in a different context – processes, whose preparation and execution definitely take up a number of months. Obviously the participants are expected to act like an „honorable merchant“. This definition I leave up to the reader.
But sharing the following values is really more important than one thinks to close transactions sucessfully too:
The expectations towards a company transaction may change in the course of the process, let‘s assume for the better. On the other hand it can not be excluded that prospective buyers ultimately shy back, for reasons that may not be related to the target company only. After all the buying company is just as dependant upn the consensus of shareholders whose decision making process may not always be that transparent. In other words, the process includes ups and downs, which may have benefits that one does not recognize at once. Transactions are not always for the fainthearted but it usually pays off to ride these storms out.
Staying hungry (to learn)
I look at each and every conversation with an investor or company buyer as an opportunity to take away learnings that I definitely pass on to my clients. Of course everybody thinks to have one’s SWOT list at the fingertipps but the view of a third party on the target company is always valuable in addition. Over time a more and more realistic assessment of the company is being shaped and that can in turn be tremendously helpful in further developing presentations and marketing approaches. But only if one stays alert and listens.
Each transaction (that I was lucky to assist) had several teams working on it, actually a gradually expanding team. First of all the shareholders of the target company, who of course know each other well (to some degree) and which are then joined by the M&A advisor.
These parties go through several stages of the transaction together before the legal advisor complements the team. Who needs to in turn understand the selling shareholders‘ sometimes varying motivations, as well as the company and business concept. A whole range of conditions in the sales and purchasing agreement (SPA) depending on the business model of the company and the perceived risk assessment.
Surprising to some, the buyer himself may be seen as partner in the later stages of the transaction too. His support can be very helpful to sail through the sometimes troubled due dilligence waters without failing. Thinking only in terms of antagonists, thus parties opposing each other will hinder rather than propel the process. From a certain point onwards an increasing number of parties has a strong interest in closing the transaction, pulling into the same direction and supporting each other.
Sense of humour
The icing on the cake and not for everybody. But imagine nerves being somewhat strained already and the Monday morning, 8am conference between the selling shareholders, their lawyers and M&A advisor(s) to prepare for the next round of negotiations over a 100 page and more contract coming up. This is, at the latest, when you appreciate an ounce of humour to get you over that last quarter of a mile to your goal.
Now bring this all together and think of a transaction as a process that made you suffer a bit but also challenged you to continuously learn, gave you the impression that your team really got solid work done and where people you only came to know recently happily laughed about your not always witty jokes. Then, as you may agree, this may have been time well invested. Which makes the success of the transaction even worthier.