April 8, 2010

Turning the weaknesses into strengths…

We warn our clients from the beginning in our first meeting to disclose only truths about their past and current state. If it comes out later on that one of the submitted data was not correct, then all of the disclosed information becomes questionable. Nobody wants to go into a marriage with someone who gave them wrong information. Sometimes hiding information can also have a negative impact like supplying false data.

Company shareholders are also human beings. Like all human beings they would like to show and explain all the positive things they have made in their business. Not all shareholders feel themselves strong enough to show the weaknesses of their company. They ususally believe that these weaknesses will diminish the value of their shares. When we ask them at the beginning of the project about the weaknesses of their company, we often receive the answer, “none”.

With the correct communication the weaknesses of your company may have on the potential acquirer as positive an effect as the strengths of your company. If the weaknesses of one party can be covered by the strengths of the other party, then such weaknesses can be eliminated very quickly. Such a situation will influence the results of the company very positively. A potential acquirer, who believes that he will be able to improve the results of the target company quickly, will be more willing and generous in the acquisition process.

Each company has weaknesses and the managers of each company may give wrong decisions. What is important is to understand such weaknesses and mistakes as issues to be corrected and to be improved instead of considering them as personal failings to be deeply buried. This willingness for improvement is very valuable for a potential acquirer.

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