Whenever one entity seeks to acquire another, the primary focusoften is seller compensation. While sellers should insist on goodprices for their businesses, other considerations often dictatewhether the acquisitions are successful to both buyers andsellers.

At this point, some might say, “You've got to be kidding! Yousell your business for the best price–end of story!” This barometerof success is absolute, provided that:
o The owner(s) will not work in the acquired entity post sale
o No employees will remain whose future careers are a concern tothe owner(s)
o The owner(s) are not concerned about past efforts to build asuccessful organization, including dismantling the originalentity
o The seller is confident the buyer will honor all contractual andverbal commitments.
If all of these conditions exist, the seller should take thehighest offer. In most cases, however, at least one of these issueswill be a concern to the seller. Because owners and staff becomethe acquirer's employees, it's crucial to be objective about howthe buyer treats his own staff or the staff of other acquiredentities. Contacting other owners who have sold to the buyer andnetworking in the industry will reveal the truth. Some buyersprovide sellers with a reference list that may or may not be arepresentative sampling of recent deals. It is best to contact atleast one former owner who is not on the list.
There is frequent talk in M&A of the importance of compatiblecultures. Studies show that unhappy buyers and sellers often arethe result of culture clashes. Perhaps the most lethal cultureissue is a significant difference in the integrity of the twoparties. While acquisition contracts help both sides remain honest,they are expensive and time consuming to enforce. When a buyerplays games with an earn-out installment calculation post sale,many sellers are unwilling to endure the expense, time andaggravation that enforces the deal. Perhaps the seller withheldinformation before the transaction. Legal remedies cannot make upthe stress and distraction of dealing with dishonest practices.There is no due diligence more important than determining the moralcharacter of the other side.
The sale of my father's property-casualty insurance companyexemplifies this theory. The company was sold to a life insurerthat did not understand my father's business and set unrealisticgrowth expectations in light of market conditions. He ended upfighting internal board room battles instead of doing what heloved: building a profitable company by overcoming externalchallenges.
My father's company was sold to several other firms over the years.Despite the fact that its finances consistently outperformed theparent company, he had to threaten to resign on several occasionsover culture clashes.
No two cultures are identical and some friction results in even thebest of circumstances. Smart buyers often make small adjustments tomeet the acquired entity halfway, while selling and explainingchanges that come with the sale. One of our acquisitions had apopcorn machine in the office–a longstanding tradition–whileanother office had a more lenient dress code. We allowed eachoffice to keep those traditions, but required both to use oursystems, which initially made life more difficult for the staff. Weput much effort into establishing realistic expectations for thesystems change and provided more support and training than wepreviously offered our home office staff.
Both buyers and sellers should be concerned about cultural fit oncethe transaction is consummated. While money is important, passion,commitment and teamwork are key as well. Charles Kingsley wrote:“We act as though comfort and luxury are the chief requirements oflife when all that we need to make us happy is something to beenthusiastic about.”