One month after wrapping up Project Hawthorne, I have had the opportunity to reflect on some of the lessons learned from the process. One of the biggest takeaways was around the pros, cons, and nuances of working with intermediaries throughout many facets of the project (lawyers, accountants, investment bankers, insurance brokers, surety bond brokers). There is a lot to say on this topic, so I have decided to break it into multiple posts to keep things manageable.

Perhaps one of the biggest realizations from the project was the meaningful value contribution from the seller's investment bankers. Though there were certainly some cons and associated challenges (might be covered in a future post), all parties generally benefited from the investment bankers' involvement. Here were some of their most significant contributions:

1) The investment bankers addressed sensitive topics with me directly, so that I could preserve a positive relationship with the seller.

So much of the success of the deal and management transition revolves around the buyer and seller maintaining a collaborative relationship. The seller certainly understands and expects due diligence to be performed, but they are prone to becoming defensive given their deep personal involvement in the business. The investment bankers organized and framed all of my diligence requests in a manner that maintained a positive mood, but still enabled###-###-#### me to reach the required level of depth.

2) The investment bankers provided muscle and smarts to get diligence done.

Due diligence is a lot of work for the seller, especially if you are having an accounting team perform a quality of earnings. Sellers of lower middle market businesses are generally afraid to involve too many of their employees (for fear of causing a disruption in the business), and they can lack the sophistication required to resolve many financial questions themselves. The investment bankers for Project Hawthorne were the brains and the brawn behind the seller's involvement in daunting due diligence process. I highly doubt that most unrepresented (or under-represented) sellers would have had the time, patience, or sophistication to make it all the way through this process.

3) The investment bankers acted as seller psychologists to keep the deal afloat.

Selling the business is a very emotional process for the seller. They often have deep personal and family ties to the company's employees, clients, and brand. It is very common for sellers in these situations to get cold feet, especially as the stressful and invasive diligence and close process drag on. The investment bankers for Project Hawthorne monitored the seller's mood and carefully adapted the information they delivered to him in order to keep things positive.

4) The investment bankers provided creative solutions to get the deal done.

The successful sale of a business requires all parties to work through many complex problems. It is common for issues to get stuck somewhere between the buyer's and seller's perspectives. Though the investment bankers are representing the seller, they are economically incentivized to find ways to get the deal done. Multiple times throughout Project Hawthorne, they helped resolved critical issues by understanding both side's positions and suggesting creative solutions.

5) The investment bankers served as process advisors.

There are one million things that can cause a deal to blow up, and good investment bankers have experienced many of them first hand. Though the buyer is primarily responsible for quarterbacking the diligence and close process, the seller's intermediaries were able to draw on previous experience to anticipate critical issues and provide guidance to keep things on track.