Myth: My Deal is Clean
Speaker 1 (00:02):
As clean as you think your company is, assume something happens that is completely unforeseeable, government regulation, tax, outside litigation, buyer changed circumstances. Something's going to happen.
Speaker 1 (00:17):
My name's Jason Mendelson and I am a former lawyer, software engineer, multi-company starter, venture capitalist, and I've been involved in mergers and acquisitions for the last 22 years of my life. A lot of people think that, well, my deal is clean. I know my company better than anybody else, and there's nothing wrong. And a lot of times that's the case, the big problem, that's only half the problem, right? You've got two parties, you've got the buyers and you got the sellers and the seller knows everything about their business. We're clean. We've done everything right, but you don't know about the buyer. The buyer is probably a newer relationship. You get acquired by the company. Your sponsor gets fired. The company has another division that goes down the tubes. Suddenly overnight, the buyer's circumstances have completely changed and how's it going to affect you?
Speaker 1 (01:00):
Then you find out that you're at personal risk for some things. My favorite was when I was living in California, I was getting ready to move to Boulder, Colorado. I was a shareholder rep on a deal. The buyer had buyer's remorse and was coming after the escrow. So suddenly I'm oh my gosh, I got to hire lawyers. I don't know where the money is coming from. I'm not a litigator. Oh my God. And one day I get served that they've sued me as a shareholder rep for a whole bunch of stuff, which I was like, this is preposterous, I haven't done anything wrong. I decided I want to get a new cell phone number, and I walked into the Verizon store, and I go get the nice new, shiny phone. They come back and they say, Mr. Mendelson, we can't give you service because you have no credit. And I say, what do you mean? I have no credit? It's a $200 cell phone. My bank accounts are pretty flush, I'm in good shape and they go, yeah, apparently you have a hundred-million-dollar lawsuit against you. I drop my head and I go, I can't believe this.