25 Years of Deal Making Lessons – An investment Banker’s Perspective
deal making Latin Business Today
 2 difficult lessons entrepreneurs must learn before an M&A deal


The author, Michael Carter, is the founding Partner of Carter Morse & Mathias, an investment bank that represents middle market privately held companies when they are contemplating a sale of the business or raising capital.

In this series of articles the author highlights the intangibles that make for a successful transaction and explains why these are critical to making this once in a lifetime transaction a success. In part 1 the Author shared 5 characteristics that a deal making business owner needs to consider. In this second part the author offers two connected lessons, including a difficult one he learned from one of his own business setbacks.

This is part 2 of a 3 part series

I began these series of articles after I was asked the question, “What makes for a great deal maker?”

In part one I shared my view that it is a combination of many well-managed qualities that contribute to success. In the second part of this series I explore issues which require entrepreneurs to re-think what they “know” so they can avoid joining the majority of entrepreneurs who don’t question themselves and end up not closing a transaction. By taking the step to re-think their approach, entrepreneurs can maximize the value they will obtain from a successful transaction.

# 6 Check your assumptions – “Knowledge has to be improved, challenged, and increased constantly, or it vanishes.” Peter Drucker

Knowledge in deal making are assumptions that one believes are facts. Too often we take what we deem to be “facts” on face value. If those “facts” turn out to be flawed, then our decisions and judgments can lead to disastrous results. This is particularly true when trying to navigate a strategic transaction through the maze of issues, personalities and agendas.

Too often people ask a question once and take the facts as facts. Challenge facts constantly. Ask the same question in different ways and, if appropriate, ask the same question to different people. It’s remarkable how the same questions or variations in questions change the answers, leading to a better understanding of an issue or “facts”.

Double check assumptions and re-check answers, it always leads to better decision-making and ultimately could mean the life or death of a transaction.

#7 Recognizing weaknesses and deal with them – “Risk comes from not knowing what you’re doing,” Warren Buffet

The best dealmakers begin the process with self-analysis. SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis is a time honored strategic planning tool. Most owners focus on the “S” and the “O” and miss the “W”s and “T”s before a transaction’s kickoff.

Every business has weaknesses and threats. When a business is running smoothly management tends to let its guard down often leading to a reduction in value or failed process.  The economist, Peter Bernstein, summed it up well when he said, “the riskiest moment is when you are right.” Before disaster strikes, life is often good. Disaster forces introspection and reaction whereas smooth sailing is comfortable.

Our own firm faced this issue a few years ago. Because of a perception that our firm did not have an international presence and expertise, our largest client selected another IB firm when it came time to sell its company. At the time, the middle market M&A business was shifting from a domestic to an international business. Things were going well at our company but our comfort level prevented us from seeing important trends in our industry.

We had not changed our market positioning nor capabilities in many years thereby putting ourselves at a significant competitive disadvantage. The failing resulted in one of our best clients adding another advisor when they decided to sell their business. We discovered that unless we addressed this issue, we would be at a significant competitive disadvantage in representing quality companies in the future.

We learned from this setback and took action by including becoming a founding member of an international alliance of boutique investment banking firms. We took leadership roles in that organization and ultimately one of our partners became Chairman of the Board. This was a game changer for our firm and today our international capability is one of our core competencies.

Business owners need to proactively acknowledge weaknesses and use solutions to these weaknesses as an opportunity to show buyers a new vision for the future


Over the first two parts of this series I have shared 7 lessons I have learned about business success characteristics. In the final article I cover 4 more difficult learned lessons.

Related articles:

Part one: 11 Deal Making Lessons Learned By an Investment

5 Tips Before Buying a Business

3 Marketing Tips to Increase Sales Success

5 Keys To Why Your Customers Buy

You Too Can Execute a M&A Strategy


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