The Very First M&A Transaction
Cave hieroglyphics tell us that around 8,000 to 6,000 BC, give or take a few thousand years, the first M&A transaction occurred. Based on the best interpretations available, here is how it went down.
Brock the barbarian approached Carl the caveman to buy Carl’s business. Carl produced and sold round stones that were flat on both sides and could be attached on each side of a wooden box to make it easier to move the box. He called them “wheels.” Carl was selling his wheels valley wide and word was spreading over the mountain.
Brock knew a good thing when he saw it and was encouraged by his successful investment in the water bucket business a few years earlier. Carl knew that Brock was experienced in M&A transactions and would be the perfect buyer. Negotiations commenced. Carl did not want to pay an investment banker and saw no need to prepare additional financial analysis since Brock was so anxious to buy his company. Carl believed he would be happy if he could get a price of at least 25 dinosaur teeth, 4 prime saber tooth tiger skins and one piece of fine pottery.
Over the next three months Carl the caveman spent a lot of time giving Brock the barbarian extensive information about his wheel business and negotiating the terms of a sale. Unbeknownst to Carl, Brock was also looking at another wheel company that had incorporated shock absorbers in their axle design. Brock knew he was Carl’s only buyer and he determined that he could probably get Carl to sell for 15 dinosaur teeth and a piece of fine pottery which is what he offered (about half of what Carl expected). If Carl’s deal fell through there was always the other deal that Brock could pursue, but Carl had no other buyers.
Carl not only did not hire “Buy a Rock Partners,” an investment banker, or “Crack a Rock” a seller diligence team, but wanted to save even more money by waiting to the last minute to bring in his M&A lawyers at “We Rock & Associates.” Carl sold for half of what he expected, and the rest of the “wheel” business is history.
Not much has changed in the last few thousand years in the M&A world. Sellers only have one chance to do the right transaction with the right advisors. They need to make the most of that chance.