Leonard Green & Partners LP
The toughest part of many deals is the lawyers. There's a certain sub-culture of attorneys who try to make relatively simple things complex and cumbersome. I generally try to avoid the attorneys' meetings because I don't have the patience. If you let certain people loose in a deal, they'll just kill it.
"The price aspect is tough. One of the things we've learned is to keep it simple. A lot of people try to win the small points and lose on the big picture.
"When we go to buy businesses, we try to make it as painless as possible on the seller. We spend a lot of time listening and figuring out what their objectives are, what we would be concerned about if we were in their shoes.
"We hate highly competitive auction situations where you have a short amount of time to make up your mind and lots of competition. We'd much rather have a slower pace and get to know the business.
"If I were to advise someone on deals, I would caution them not to buy businesses at cyclical peaks, not to believe that trends last forever, and to avoid overleveraging and falling in love with debt. We find the current debt environment very troubling."
Senior Managing Director
FTI Capital Advisors Group
It always helps to have good chemistry between the parties because sometimes those intangibles are more important than actual negotiations. If you don't have good chemistry, it doesn't make for a timely or efficient process. It can cause a transaction that otherwise makes sense to go sour.
"Often times, people get caught up in negotiating to the last degree, rather than building a consensus among all the various stakeholders in the deal. That usually involves compromise among all parties.
"What works for an investor is to come in, in a short time frame, and to get enough comfort with the company and agree to provide capital on a quick basis. Usually they'll link the capital to an option to take control of the business.
"If there are good dynamics between the principals involved and a real desire for the transaction to occur, then ultimately a deal will probably happen. It's just a matter of finding the right fit to put the two parties together. There are different tactics and negotiating styles, but generally it makes sense to build consensus."
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