Feel Of The Deal

CEO Insider Reveals the Human Side of Mergers and Acquisitions

“Treating people well has a big payoff,” says Robert Sher, mergers and acquisitions specialist and author of the new book The Feel of the Deal.

Businesses are bought and sold every day. Mergers and acquisitions have a developed a reputation for being brutal, callous and indifferent about the people involved. Are they really that fast and furious? Is it really a vicious world?

Robert Sher, author of The Feel of the Deal, knows different. In fact, he’ll tell you that the acquisitions he’s gone through have been long, deeply involved and extremely personal events — daunting emotional and intellectual journeys — that left him a changed person forever.

Robert Sher, an M & A specialist with years of CEO experience, captures the real story and reveals what goes through the mind of a CEO in a true life story about what happened as he worked to acquire another company.

The Feel of the Deal is about romancing the seller and then buying the business. Sher discovers that buying a business demands all of the skills that running a business as CEO requires. That includes negotiating, thinking about how to best work with other people, crunching numbers, identifying the real motives of others, evaluating ROI of various investments and working to keep people up to speed on all sides. Here is a captivating story that recounts the candid details of what CEO Robert Sher actually did, what happened and what ultimately flowed from it.

Sher has a thoughtful, self-revealing and totally engaging personal style that makes the action genuine. His skills as an educator also shine and he makes complex ideas simple and actionable. He is incredibly disarming and truthful about what drives him crazy about M & A:

Unrealistic Expectations. Too many buyers and sellers don’t understand what a business is worth or how the process works. They waste a lot of time and energy for everyone.

Bad Behavior. Buying and selling businesses is emotional. With emotion, bad behavior often appears. Dealing with this is difficult, draining, and can really hurt the chances of both parties achieving their objectives.

Confusion of Guesswork with Facts. Buying and selling a business is a process of discovery of hundreds or thousands of facts and issues. As the onion is unpeeled, people tend to jump to conclusions and fixate on bogus positions or perceptions. That can lead to bad decisions and destructive negotiations.

Faulty Communications. With so much being learned on both sides, using the right communication vehicles in the right way at the right time is crucial. Conversation is very critical which means heavy use of in-person meetings and the phone. “Deals don’t get done on e-mail alone!”

The Feel of the Deal is filled with key strategic business advice that is important and useful to both buyers and sellers of businesses – including those who are even contemplating the possibility of an acquisition years away.

Robert, I read your book over the last couple of days and really enjoyed it. Great book! I can sympathize with every chapter. When I worked at Fairchild we built that company from a $550M spin-off from National through acquisitions to being a $1.6B company. When you have a chance I would actually love to talk more with you about your experiences.

Hubert Engelbrechten, CEO
gTronix

Dear Rob,
I have read The Feel of the Deal twice! It is incredible. I have let a friend borrow it and he called to tell me how much he likes it as well. You should be really proud of it. It is beyond informative. I loved it! I cannot thank you enough for writing it.

Josh Eichner, VP
Framerica

Rob:
Finished it and enjoyed it very much. Your pearls at the end of the chapter have great value for me. This will become a resource book for me.

Dennis Heath, Founding Principal
MBH ARCHITECTS

In this era of cookie cutter business books, Robert Sher has written one that truly stands out. He puts the book into the framework of a true-life story about acquiring another firm. At each point, he offers general ideas that flow from what he actually did. Sher is thoughtful, self-revealing and has a style that makes complex ideas simple and actionable.

Dennis Jaffe, Professor of Organizational Systems
Saybrook Graduate School, San Francisco

What a captivating read —I was only going to glance through it but couldn’t stop reading. I wish I had this book before I set out on my first acquisition; this is the type of candid information that helps you prepare for a difficult task. I related closely with many parts of what Rob wrote, and felt connected with the heart, mind and soul of a fellow CEO.

Rand Morimoto, CEO
Convergent Computing; Cyber-Security Advisor to the White House

Robert Sher has created a rare opportunity for readers to get inside the head of a CEO. The Feel of the Deal is a wonderful story of how the emotional elements of an acquisition are intertwined with hard business analysis to result in a “win-win” result for both buyer and seller. Sher shows us how he combined rigorous financial analyses with the nuances of the “negotiating dance” that takes place between buyers and sellers. Any business owner wanting insights on the ups and downs of acquiring another company – especially a competitive firm – would find The Feel of the Deal both educational and enjoyable.

Paul Witkay, Founder and CEO
Alliance of Chief Executives

Understand the anatomy of a deal from a CEO who has actually been through the process multiple times! Robert Sher shares step by step how a deal evolved, what the important considerations were at each step, and what he did, what he did not do, ….and why. The Feel of the Deal is a conversational dialog with a CEO. He has “offline conversations” with the reader throughout the book that really help us understand the feel of the deal! I highly recommend The Feel of the Deal to anyone thinking about buying or selling a business.

Jim Horan, President, Author, Consultant, Speaker
The One Page Business Plan Company

The Feel of the Deal is a very useful and user friendly anecdotal text for the modern entrepreneur. The book takes a basic practical approach to business and acquisition in a thoughtful way. The Feel of the Deal is a valuable handbook for both the new and experienced business professional.

Constance O’Connell

The Feel of a Deal is an authentic, original account of the acquisition process in business. The narrative is accompanied by provocative reflections and takeaways. It’s a good read.

Ben Casnocha, Entrepreneur and Author

Why did you write The Feel of the Deal?

Over the years, I’ve seen so many CEOs and entrepreneurs not even consider buying businesses as a strategy for growth. At first, I thought that they found it too complex, but so many CEOs do such complex things, so that wasn’t it. I realized that it was…

a fear of the unknown that was stopping them. They just didn’t know what it would feel like to buy a company. They heard so much about the mega-deals in the media that many just figured it wasn’t in their league. But it is, and this book shares with them how it feels to buy a business, and the steps I went through to do it.

How have people found this book useful?

Entrepreneurs and business leaders new to the world of acquisitions find it helps them set expectations for the process. They discover some best practices they can adopt immediately as they begin to consider buying a business as a growth strategy. Veterans appreciate my approach to the interpersonal aspects of working with people in general and see the value far beyond the context of doing a deal.

Is it common to take so long to get the seller to say yes?

This whole process can and often does take months or years. In particular, when the buyer is reaching out and identifying strategic acquisitions, they will begin to romance firms that were not planning to sell. In these cases, it will take a long time, especially if the buyer does not want to push the issue by overpaying. There are other cases where the seller initiates the process, and they generally go faster — as fast as three to six months.

So how did the doing the deal in the book feel to you?

At many points it tried my patience, as it took so long. The saving grace was that it wasn’t my only growth strategy. I had many irons in the fire and plenty to do as a CEO. Once the seller decided it was time to move forward, it was incredibly exciting and represented a big challenge: to discover whether the acquisition was a good deal, then buy it at a good price. Ultimately, at the price we paid, it was a major gamble, so there was some anxiety along with all the exhilaration. It seems big rewards always come with big risks, and the risks all come right away after the deal is done. Clearly, this was a highpoint of my career as a CEO to date.

Is The Feel of the Deal only about buying the business?

The story is about romancing the seller and then buying the business. But buying a business demands all of the skills that running a business as a CEO requires. As a CEO, I was always negotiating, thinking about how best to work with other people, crunching numbers, identifying the real motives of others, evaluating ROI of various investments and working to keep my board on my side. The story shows how I do all of those things, but focused on one particular exercise — buying Aaron Ashley. The end of chapter sections called, “Rob’s Reflections” and the 15 essays on business are broadly applicable to anyone running a business.

Is the seller Phil Ginsburg still alive? If so, did he go blind?

I get this question often. The good news is that his sight has substantially recovered, and he is still, fully and completely alive. Phil Ginsburg, shown at right.

What was the most trying part of the story for you personally?

Without doubt it was the weeks where the deal was about to close, but my bank financing was uncertain. It’s detailed in Chapter 12; Attempted Murder. The thought of having to tell Phil that we couldn’t do the deal after all that we’d done was not pretty, nor was the thought of trying to do the deal without adequate financing and risking the firm.

What three key strategic business practices stem from your experiences in the story?

• Make friends well in advance with anyone from whom you might buy a business or sell a business. The advantage of an established relationship and the trust that brings is massive.
• Have a clear strategic reason for doing an acquisition in advance, and stick with it. Doing a deal is exciting and tempting, and one can easily get swept away with things. If you only work deals that are strategically sound, getting swept away a bit won’t land you the wrong deal.
• Test all your assumptions really well. Crunch the numbers and understand all the fundamentals. Surprises are your enemy–work hard to smoke them out early on.

What drives you crazy about M&A?

• Unrealistic Expectations. Too many buyers and sellers don’t understand what a business is worth or how the process works. They waste a lot of time and energy for everyone.
• Bad Behavior. Buying and selling businesses is emotional. With emotion, bad behavior often appears. Dealing with this is difficult and draining. Moreover, bad behavior can substantially damage the chances of both parties achieving their objectives.
• Confusing Guesswork with Facts. Buying and selling a business is a process of discovery of hundreds or thousands of facts and issues. As the onion is unpeeled, people tend to jump to conclusions and fixate on bogus positions or perceptions. That can lead to bad decisions and destructive negotiations.
• Faulty Communications. With so much being learned on both sides, using the right communication vehicles in the right way at the right time is crucial. Direct conversation is critical: this means heavy use of in-person meetings and the phone. Deals don’t get done on e-mail alone!

Please tell us three points of advice for sellers.

• Prepare to sell three years before you want to sell, and run your business at all times as though it might sell in the next 12 months.
• Always be aware which companies really want to buy your business, keep it attractive to them, and keep a personal relationship going with them.
• Arrange to have multiple buyers bidding for your business at the time you wish to sell it.

Please tell us three points of advice for buyers.

Always be aware that acquisitions can be one of your key growth techniques, and know strategically which businesses would give you the best jump forward.
Stay financially healthy and well positioned so you can afford to pay the price for a good company when it comes along.
Build a reputation for being a great buyer, and position yourself so that the companies you most would want to acquire think of you as the best (and perhaps only) company to which they’d like to sell.

In The Feel of the Deal it sounds like you listen to every word you hear and then analyze. Do you really do that?

In critical business situations and to my clients, I do always listen carefully. Not just to what is said, but to the attitude and emotions behind what is said. I also think about what transpired, and what it means to the relationship. In negotiating situations, I also carefully control what I say and how I say it.

At the same time, I’m not analyzing everything and everybody around me. There’s a lot of life that goes on that I just take part in, including much of my friendships with the people I also do business with. Most of my friends and business colleagues feel and know that I’m straight with them and honest in whatever I say. Being diplomatic doesn’t have to mean being dishonest. Honest doesn’t have to mean hurtful or insensitive.

If someone offered you a drink now, would it still be Diet Coke, or would it be Dewars?

We all change. My default sodas right now are Diet Mountain Dew and Diet Root Beer, with Diet 7-Up as a backup. Dewars has persisted as my favorite hard liquor, even five years after I developed my taste for it, courtesy of Phil Ginsburg.

Steve Bengston of PriceWaterhouseCoopers interviewed Rob on the PriceWaterhouseCoopers Start Up Show. Steve had some interesting questions based on his review of the book. Unfortunately the interview is no longer online.