The Importance of Momentum When Buying and Selling a Security Guard Company

Maintaining momentum with dialogue and the flow of information is very important to the buyer and seller during negotiations. And the intensity of the momentum indicates the commitment each side has in completing the transaction. A buyer who keeps the momentum throughout the entire process – investing time, money and personnel resources to getting the transaction completed timely is sending the seller a message that the seller’s company is important. Keeping the momentum on the seller’s part is a way the seller tells the buyer that there’s a genuine interest in selling the company, and that the seller’s motivated enough for the buyer to make these necessary investments. However, most buyers and sellers are somewhat cautious in how they communicate this eagerness to complete a transaction, because of their concern that in doing so they may lose leverage in the negotiations.

In order to start and maintain the momentum, both the buyer and the seller have to be committed to the transaction; it cannot be a one-sided effort. As previously stated, each side maintains the momentum in order to show the other side that there’s interest, but both parties also maintain the momentum for its own benefit. Usually, there’s some time-line necessary to getting the deal closed in order for either side to enjoy the benefits of the transaction. Momentum Is Important to Both Sides

From the buyer’s perspective, momentum ensures that the transaction closes, which is very important to the buyer, especially if the seller’s company is a vital part of some strategic plan. For example, the buyer may need the company in order to enter a certain vertical account or geographic market, or it may provide an attractive return on investment. In either case, the longer the transaction takes to close, the longer it takes the buyer to start benefiting from the acquisition.

From the seller’s prospective, the momentum is vital to keeping the buyer interested in the deal, especially true for buyers who are pro-active in the acquisition market. If the buyer’s due diligence team must wait for information from the seller, or the seller’s attorney does not respond promptly to the buyer’s attorney on important purchase agreement issues, the buyer’s personnel will be assigned to other projects. Then the buyer’s team might not be available when the seller is ready to resume the process. If this scenario goes on long enough, frustration starts to set in; the momentum is slowed down, and the negotiations may even stop completely.

Organizing the Process to Maintain Momentum

Some of the steps in the negotiations require the buyer and/or seller to be pro-active and even sometimes aggressive in dealing with getting information or decisions on important issues from the other side. The buyer and seller are usually concerned that any eagerness they display could cause them to lose negotiating leverage in the transaction – and rightly so. Whatever the decision as to who is best to handle the steps, the following are some important steps in organizing the process and making sure the momentum is maintained:

• Assign a “point persons” to manage the activities for their respective side.
• Exchange detailed contact information for personnel assigned to the transaction.
• Meet with its respective attorneys, tax advisors, point person, and transaction manager to reinforce the reasons for doing the transaction.
• Engage in frequent communications between all the team members with decision makers and updating status to the entire team.
• Start accumulating the due diligence information BEFORE any buyer prospects are contacted.
• Seller should review the buyer’s standard purchase contract.

Regardless of the seller’s or buyer’s need or desire for a quick deal, momentum in the acquisition process should be about moving through each stage of the negotiations in an orderly fashion balancing the needs of both parties. And not so fast as to cause mistakes that may later prove costly to either side.

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