Advice for A/E CEOs to get the best deal

What to avoid so that you can get the best deal for your shareholders

By Morrissey Goodale March 21, 2022
Courtesy: CFE Media & Technology

If you’re like every other CEO in this industry right now, you’re being inundated with approaches to buy your firm. More than a few CEOs (and their boards) have moved from a pre-pandemic position of “We will never sell!” to “Hmmm…maybe selling or outside investment could be a very good thing for us.” It’s a seller’s market like never before, and there’s no more than another four years left in it. If you’re one of those CEOs who has been assigned to open discussions with a suitor, here are some tips on what NOT to do, so that you can get the best deal for your shareholders.

1. Don’t do anything without an NDA: Priority #1 at the start of any M&A exploration is to protect your firm’s brand and proprietary information. Until you have a signed non-disclosure agreement (NDA) in place, do not advance discussions and do not share anything written with any suitors. The NDA provides the ground rules and legal context for all future discussions and information exchanged. (Many suitors will try an “Aww shucks, we’re just talking here” initial approach to glean information. Don’t fall for it. You need to take Michael Corleone’s advice “It’s not personal, Sonny. It’s strictly business.” Get the NDA in place first. And make sure it covers the fact that the discussions are even taking place—in addition to any content shared or exchanged.) If the suitor won’t agree to this, then cease all discussions because they are not a quality buyer.

2. Don’t get emotional: Don’t fall in love with the first suitor. Don’t make your decision based on the “charisma” of the suitor’s CEO. Don’t delude yourself that “it’s a perfect cultural fit!” after two meetings (First, it’s never a perfect cultural fit, and second, you can’t figure out the cultural fit by just meeting with a leadership team). It’s like your college-going child choosing a school based on a single visit to campus—makes no sense (for them or for your pocketbook). Save your emotion and passion for making the integration of both firms successful. Be dispassionate in your deal-making.

3. Don’t take the suitor’s word for anything: Get everything in writing. If they say they are having a great year, get them to send you their financial statements. If they rave about their “best in class” bonus plan, get the details. If there’s information that isn’t available in writing, then get it verified by a third party. What do I mean? If the suitor represents that they do a fabulous job at integrating firms, then get them to put you in touch with CEOs of firms that they have acquired. And don’t just talk with the names that they give you first (those will be the integrations that went well). Ask to speak with the CEOs of other firms they’ve acquired, too (their response to this request will be telling).

4. Don’t accept the first offer: It’s NEVER the best one. Negotiate, negotiate, negotiate. That is all.

5. Don’t let them speak to stakeholders without a signed LOI: Buyers will always want to talk with your “next generation” or “take a look behind the curtain.” They will want to talk with clients to “just check that you’re as good as your reputation.” One, or in some cases, both of these requests are reasonable. However, you don’t give them this level of access until they have put in writing the terms of the deal that floats your boat in a letter of intent (LOI).

6. Don’t assume the buyer’s accountant knows what they’re doing: Every acquisition that involves a financial sponsor (private equity or family office) involves a Quality of Earnings (QoE) assessment. This must be completed to satisfy their lender’s criteria for the transaction. If the QoE doesn’t sync with the financials you’ve represented, then the buyer will either try to re-trade the deal (and this never gets re-traded UP to your advantage) or walk away from it. The financial sponsor will bring in a national accounting firm to run the QoE. The problem is that these big accounting firms frequently assign junior folks with no AE or environmental industry experience to run the QoE assessment. These junior staff don’t know how to analyze project-driven businesses, and they frequently flat out get the earnings analysis wrong. This can cause a huge amount of heartburn and wasted time and effort at a critical part of a transaction. At a time when you and the suitor should be figuring out integration, you may find yourself instead going on a hugely problematic detour that can damage relations between seller and buyer and possibly kill the deal. Make sure the buyer’s QoE team knows what they are doing.

7. Don’t think it’s done until it’s done: I had a buyer pull a deal the day before the seller’s leadership was to announce it to their internal staff (30 days before closing). The hotel room had been booked. The champagne was chilling. The speeches had been written. It was…awkward. I’ve seen deals get killed on the five-yard line because of missed projections. It’s not unusual at the 11th hour for skeletons to fall out of closets that the seller didn’t even know existed, resulting in the rug being pulled from under a deal. I liken due diligence to reentry from space. It’s 60 days of non-stop turbulence and buffeting. You’re praying that the heatshield stays on. And you only know it’s over when you splash down safely. It’s the same with getting your best deal done—you only know it’s done when the money is wired to your team’s accounts. (Which is always a curious anti-climax.)

This article originally appeared on Morrissey Goodale’s websiteMorrissey Goodale is a CFE Media content partner.

Original content can be found at