M & A Matters: February 2015

I have known John Mill for many years. He is one of the most talented lawyers working in tax succession. I did a book review of his most recent book, Hire Your Buyer: a Philosophy of Value Creation.

Hire Your Buyer offers a solution to the dilemma of business succession. That solution is to work with your employees to create and extract value from your business. In the book, Mill actually advises owners to actively explore the option of selling their business. But the reality is that many businesses will not sell under terms that the owner will be happy with. Mill astutely analyses the owner’s situation from the valuation and value-creation perspectives. As he points out, the mergers and acquisitions industry has developed the most sophisticated approaches to value creation. To write the book, Mill conducted extensive research of the approaches used in M&A. The result is a highly sophisticated yet straightforward explanation of the value creation process that applies in any business.

M&A represents a successful growth strategy for many companies but, while potentially profitable, M&A transactions are complex and often risky. As Mill points out, the majority of mergers fail. Why? There are many reasons but a common one is a clash of culture. Far too often mergers are looked at simply as large financial transactions. This purely financial approach to a merger misses the fact that a business is really driven by its people.

Mills says earning how to foster a win-win environment of trust, engagement and community using a relationship values charter instead of contract penalty clauses is a much more effective long-term governance structure. Win-win however, is not a naive pursuit. Win-win requires higher rather than lower skills. Furthermore, developing the team building skills identified in the book has the happy coincidental effect of allowing a lot of value to be created and shared.

Covering the latest trends, developments, and best practices, Mill provides a comprehensive, hands-on resource that walks readers through every step of the M&A process, offering practical advice for keeping deals on track and ensuring post-closing integration success.

The book is logically constructed and the writing is tight and concise. It is filled with case studies and war stories illustrating what works. Mill’s valuable tools and checklists provide crucial guidance on preparing for and initiating the deal; due diligence; deal structure; and valuation and pricing even during turbulent-market conditions.

The extensive bibliography at the back lists well over 100 excellent books and articles. Chapter two entitled ‘Can I sell my Business? The Value Gap’ does an impressive job of presenting business valuation in a hands-on way that an owner can work with. The appendix titled ‘Seven Steps for Determining Business Value’ is, by itself, a valuable working document that will provide a great starting point for any owner considering their options.

Mill’s message is one of optimism and hope. He believes that there is a better way – a higher purpose that we can all aspire to that allows for a much better life in business and in the community. I agree and I recommend this book to anyone who is interested in M&A or business succession. Hire Your Buyer: a Philosophy of Value Creation is available now on Amazon at hireyourbuyer.com.