How to spot an M&A jargon head
We love what we do at Waypoint, and with passion come blind spots! We laugh at parts of the investment community we brush up against because it’s full of jargon and cliches. But truth be told, when we take a long hard look at ourselves, we’re deeply steeped in M&A lingo that can leave people scratching their heads.
So with Christmas nearly upon us, here’s an early present for our clients and other businesses out there. How to spot someone like us in the wild – such as at that pub quiz or dinner party you have coming up.
And if you then choose to avoid that person like the plague, fair enough. We won’t blame you.
Sign #1 – no-one calls a spade a spade
There’s nothing like using 17 words when one will do. We have, non-ironically, called a sale a “value realisation event”. Ugh.
When it comes to other obscure terms, the payment you receive when you sell your business is of course euphemistically known as your “consideration”!
Sign #2 – ADAs (Annoying Deal Acronyms)
The late Charlie Munger of Berkshire Hathaway once said, “Every time you hear EBITDA, just substitute it with ‘bullsh*t’.”
And it’s not the only one. We have LTM for Last Twelve Months (not to be confused with the highly contentious LTN – Low Traffic Neighbourhoods!)
A SPA is not where you get a massage anymore, it’s now a written agreement by seller and buyer – a sales and purchase agreement.
And PE which used to be in the big hall in your pants and vest – i.e. physical education when you were a kid – is now a source of funding.
Frankly, it’s amazing we don’t call our first-born child an ‘FBC’.
Sign #3 – the same phrases, ad infinitum, many of them open to misinterpretation
Hands up if you’ve ever heard one of these:
“We love your business, you’re just a bit early for us to invest.”
“We will exit within three years.”
“We have net profit of X” excluding our dividends of course
Yup, thought so.
“A messy cap table” – no not the one below – which is pretty neat and tidy compared to the many small ownership stakes in a business we’re actually referring to!
“A business with a high degree of billability” – and no, not the impressive kind shown in this image
Sign #4 – how we look, padded gilets
It used to be the classic suit and tie. Then just a suit with top button undone. Now it’s being mistaken for a sailor like Marty McFly in Back to the Future. If our industry has a uniform, it’s the infamous padded gilet.
And so, with your senses now trained to identify those like us, we’d like to wish you all a Merry Christmas and a wonderful holiday season. And, despite everything we’ve just said, please keep taking our calls.