M&A Jargon and Its Place
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, definitions and general M&A jargon to sift through. 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 M&A jargon to be completely and unnecessarily complex. We have often had to navigate through long offer letters that are filled with micro-detail and many varying 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, as if they were designed with this eventuality in mind.
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 During the Covid Pandemic At A Faster And Simpler Rate – Without All of The Needless Business And M&A Jargon?
Complexity in deals leads to many lengthy and costly calls with multiple advisors, often leading to needless 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 actually necessary? Are any greater insights or revelations achieved by it? Or is it simply needless M&A jargon that is getting in the way of what really needs to be at the center of attention?
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 M&A jargon. We can all work faster by avoiding M&A jargon and instead using crystal clear language and models that we can all understand. 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 we all must go through reaches far beyond just the acceleration of deals as we need to reset all aspects of the business. In a Covid and Post-Covid age, 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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