I’ve observed over my career the tradition of celebrating the completion of a deal and what is said at the event, usually over a beverage. 

There is always a moment in a transaction where the teams on both sides know that, barring any completely left-field unknown, the deal is done. Sometimes it’s early on and sometimes it’s as late as the completion date. However, until the funds/shares/enterprise change hands, it’s not done.

What this means to an advisor is that while our clients are spending the money or building out the business in their minds, we’re still looking for the unknown and while we may get a sense that the parties are “pregnant” with the deal, we must leave the high fives until we are offered the post completion bubbles. 

It’s two moments, not one that mark success. That’s what makes M&A such a challenging and thrilling space to work in. I liken it to looking after the groom as the best man at the stag do. The deal is done bar the technicalities of completion, but a missing eyebrow might make all the difference. 

Moment One: The Commitment

Moment two will never arrive until the parties experience moment one. This is the emotional connection between buyer and seller where the buyer commits to the deal and the seller gets comfort that what is being offered is better than holding on to the business as it is today. Some investment bankers I have dealt with swear by the need for a handshake; believing that the physical connection is important to making this commitment. Others believe that the NBIO (non-binding indicative offer) or term sheet is the sign that the parties are committed (and the rest is just the lawyers earning a fee).

My sense is that an NBIO is vital but I feel that a commitment has been made when I see the decision makers involving their teams more widely in the transaction. The reason I see this as a sign of commitment (irrespective of where in the documenting of the transaction we are) is that the leaders of the organisations are starting to bring their people with them on the journey of the deal.

When I see communications dwindle or a need to chase, my policy is to back away and let the emotional process play out for my client (whether buyer or seller). Money represents time. Time invested and time foregone. So paying for something or giving something up in exchange for payment is not black and white.

Post the commitment, I see very few transactions fail to complete… but then there is moment two to worry about.

Moment Two: The Completion

99% complete is 100% not done and there are a few tasks to conclude between the commitment and the completion that can threaten completion. Despite the parties making the commitment there will be various conditions precedent (to be concluded prior to completion) that must be ticked off. These can be financial in nature, or commercial. A good example of one (for a seller) that can cause some headaches is getting key staff on board. In many cases, key staff will already be aware of the plan and so it is just a matter of documenting any incentives and any changes to the relationship with such staff to see them through the completion.

The lawyers tend to be heavily involved in the process leading up to completion and I liken a good completion to a game of ping pong with two balls. The flow of emails between firms is relentless and neither firm wants to be the one that is holding things up.

Completion, to use a simple share sale as an example, is the process of exchanging documents (share transfer instruments, certificates, resignations and resolutions) for dough (paid via the trust accounts of the lawyers). The role of the client on completion date is to play golf but keep the phone on just in case. The lawyers and other advisers focus on ensuring all conditions are met and then exchanging the completion undertakings. For some reason, these always end up being rushed and about as close to the deadline as humanly possible.

Why golf, well, whatever time/thought consuming activity it might be must be sufficient to distract one from the fact that despite every effort to control every possible outcome and all that might ride on the deal going through, here’s the time you have to trust your gladiator to get the job done. Also, there’s not much that can be done. Completion is the sum of the parts of the deal that have come together over months and sometime years.

For the lawyers, this is the moment of relief that you have done your job and executed for your client and nothing has arrived from left field to spoil the party. For the client this is the moment of elation that all you have worked for or planned for the future is now a reality.

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