InSight

Exit and Growth Strategies for Middle Market Businesses

The Perfect Gift

By Jim Gerberman | Dec 09, 2013

Gift BoxesAs we approach this season of giving, each of us can relate to the challenge and occasional angst that we may feel in searching for “the perfect gift” for our loved ones. Although we’ll “know it when we see it”, the process of searching for “it” is seldom clear or obvious.

Many of you are familiar with O. Henry’s classic story, “The Gift of the Magi”, first published in December 1905. For those unfamiliar with the story, I apologize in advance for spoiling the surprise ending. The story involves a young couple – Jim and Della, struggling to find Christmas gifts that would adequately express their love for each other. Due to their modest means, any gift would seem to require money that they don’t have. Each has one possession that they highly treasure – Della’s long flowing hair and Jim’s shiny gold watch. Della decides to sell her beautiful hair so that she can buy a platinum fob chain for Jim’s watch. When she excitedly presents her “perfect gift” to him she’s aghast to find that he has sold his watch in order to buy his “perfect gift” – a set of brushes and combs for her hair. Though they are left with gifts that neither can use and they no longer have the one possession that they had treasured, the moral of the story demonstrates their willingness to sacrifice in showing their love for each other.

In M&A transactions, sellers and buyers are each trying to achieve the “perfect deal”. By their very nature, these transactions are complex and multi-faceted, with terms and aspects that might have a high degree of value (or cost) to one party while having a relatively low impact to the other – meaning that one party may be able to accommodate the other without giving up too much in return. An example could be the allocation of purchase price – whereas a certain structure may provide a tax benefit to the buyer while having little or no effect on the seller. An effective M&A advisor will look for and find such instances so that both parties are able to feel that their interests and needs are being addressed. Although the concept of a “perfect deal” is likely flawed – and the pursuit of such is likely to produce deal fatigue, there are numerous instances whereby a creative advisor can find common ground that produces a “win-win” situation – providing benefit to both parties. Referring back to “Magi”, one could make the point that both Jim and Della could have benefited from having such a trusted advisor looking out for their interests by learning as much as possible about the other party’s needs as well as actions being considered or taken to meet those needs.

Which brings us back to this season of giving. As M&A advisors, we realize and appreciate the special relationship that is formed when we are granted the privilege of earning your confidence and becoming your Trusted Advisor. With a sense of humility and gratitude, we’d like to thank you for this “perfect gift” of your trust. We wish you and yours the very best this holiday season and throughout the New Year.

Posted by Jim Gerberman.

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