- November 10, 2016
- Posted by: admin
- Category: Exit Planning
There’s a famous moment in American history where a man going by the alias of D.B. Cooper hijacked a plane in 1971, extorted $200,000 in ransom (which would now be worth $1.2 million) and then parachuted out of the plane, never to be seen again.
This dramatic, James Bond villain-esque move is often how business founders and owners imagine themselves exiting their own business. In truth, many of them make critical mistakes, which more often than not come down to the fact that their metaphorical parachute was not as sound as they had hoped or that they couldn’t hold onto their piles of cash as they made their descent.
So, to learn from others’ failed attempts at pulling a Cooper while selling your business in Las Vegas, consider the following rogue’s gallery of failed M&As, business sales, and exits:
1. DaimlerChrysler, AOL Time Warner, Sprint Nextel
These three M&As technically went through successfully, and likely made plenty of people lots of money in the process. However, all of these companies’ reputations, shares, and their executives by proxy were tarnished for years following the disastrous results.
Former Chrysler shareholders, for instance, filed a class-action suit after German auto company Daimler bought out the company through a $39 billion stock swap. They alleged that the transaction was not a merger of equals, as promised, but rather a takeover that could not deliver on expected synergies.
Daimler later offloaded Chrysler to private equity firm Cerberus, but not before ousting the company’s former CEO.
2. Volvo and Renault
Swedish automaker Volvo once stood the chance at becoming a European giant had it merged with Renault. Doing so would have purportedly helped them save $5 billion in engineering, production and distribution synergies.
However, the government of France had a majority stake in Renault, which would have greatly complicated things for Volvo. Worse, internal Volvo management and staff felt that they were being subjected to a French state takeover.
Volvo’s executives attempted to go through with the deal anyways, but the board rebelled against them, forcing the CEO out. The deal failed, and both company’s stocks and brand image suffered, particularly Volvo’s.
PointCast, a mid-90s internet startup company, made the simple mistake of hanging around too long until the bubble finally burst. Rupert Murdoch’s News Corp offered the company a $450 million buyout in 1999, but the deal fell through when company couldn’t decide whether to accept.
They were later bought for $7 million, far less than the nearly half billion they had on the table.
4. Sumner Redstone (Viacom)
Viacom’s 92 year old company owner allegedly boasted on multiple occasions that his exit strategy was to simply “live forever.” He attempted to hold onto power while simultaneously blocking company moves he felt were not within his own values, including trying to name his daughter as future CEO while removing other executives as he saw fit.
Eventually, his hubris caught up with him when the results of a court-ordered examination by a geriatric psychiatrist prompted him to resign. He still owns a 70 percent voting interest in Viacom and possibly billions in private holdings, but he certainly won’t have the glorious exit he imagined.
Lastly, we describe a failed deal that needs little introduction. Had Dynegy gone through with the $9 billion merger, they would have no doubt gone down with the flaming wreckage that was Enron. Enron’s executives fared the worst of all, exchanging golden parachutes for jail cells in many cases.
Avoiding a Notorious Exit with the Help of Business Brokers in Las Vegas
Chances are that if your business exit strategy falls apart, it won’t make it into textbooks or news stories. However, it could severely dampen your future plans.
The best way to ensure you do not repeat the mistakes outlined above is to enlist the help of experienced business brokers in Las Vegas. They can help prevent regrets and mistakes that so often stand in the way of what could have been a rewarding, triumphant and well-deserved exit.