Mergers & Acquisitions from A to Z

Two houses in my neighborhood recently went up for sale. The sellers took very different approaches to preparing for the transaction. One couple, who were nearing retirement, began the process almost two years ago. Every weekend they would work on a different part of the house or the garden, taking steps to increase the value and hence raise the ultimate selling price. The proceeds would represent the bulk of their retirement nest egg, and every dollar of value was critical. Naturally, there were certain items that could not be specifically addressed, such as new wallpaper and paint, because they did not know the needs and wants of the possible buyer. In such cases, they took steps to make the rooms more generic, so as to appeal to the varying tastes of prospective buyers. The other couple, in their midthirties with three young children, seemed to have started preparing about one week before the first prospective buyer arrived. They were on their way to their next home, and although the selling price mattered, it really affected only the size of their next mortgage. In fact, with three wild and destructive kids, it seemed that they were taking steps to decrease the value of the house on a weekly basis! Clearly, their approach to the buyer was “take it as is and perhaps it will meet your needs.” Prospective buyers came into the transaction knowing that a lot of time, care, and attention would need to go into the house after the closing.

In many ways, these two approaches mirror the attitudes of sellers of businesses. Some companies become available for sale only after years

-13-