For those of you who do not know, a Babel Fish comes from the Douglas Adams comedy science fiction book “The Hitchhiker’s Guide to the Galaxy”. In the book, he describes a bright yellow fish that, if placed in your ear, can automatically translate any language into your native tongue. Mergers and Acquisitions (M&A) and finance, like all sectors, has its own language and definitions and as advisors, we spend a fair amount of time interpreting and translating that language to carry out deals.
I will let you into a secret, “we have always felt this unnecessarily complex”. We have often had to navigate through long offer letters filled with micro-detail and many ambiguities that can be difficult to clarify. Let us not even begin to talk about the 100-page long sale and purchase agreements, sectioned to jump around and ensure that even the most informed clients suffer from “deal fatigue” at the final legal stage. Much of this perhaps is done on purpose, giving opportunity for buyers, sellers and investors to close in on the final details to renegotiate the price. Sometimes one feels it is done to justify the fees. Sorry yes, I will be thrown out of the finance magic circle, but often, in my opinion, it is just pure habit or in the case of legal contracts a very bad template that needs materially revamping for the 21st century.
Can we restart more quickly and simply?
Complexity in deals leads to many lengthy and costly calls with multiple advisors often point-scoring. Some bright and experienced clients also add to the murky waters by leading in with their own text and agenda. Yes, it is all very exciting but…. is it necessary? COVID-19 has been an enforced factory reset for many businesses and can be a reset for buying and selling companies as well as the language of investing. Can we restart more quickly and simply? Consolidation and growing companies particularly with superabundant capital (see our previous article “Fire up growth with superabundant capital”) can create great companies out of good.
For me, there should not be a Babel fish translating industry jargon. We can all work faster by avoiding jargon, using crystal clear language and models. Dare we be franker and say “yes” and “no” more quickly. Common sense is required to accept that all deals have a risk. Therefore, the reset goes beyond just accelerating deals as we need to reset all aspects of business. The world is more complex than ever before, and simplicity is the fresh air that creates flow. Dare we try it?
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