Early Deal-Breaker Disclosure

Shaan Puri and Sam Parr share their experience about M&A deals, emphasizing the importance of early disclosure of potential issues and working with experienced advisors. They believe hiding problems only leads to bigger issues later, and having the right guidance is crucial for successful deals.

Key Points:

• Early Disclosure Strategy:

  • Tell potential buyers all reasons they shouldn't buy you upfront
  • Disclose skeletons in the closet once serious interest is shown
  • Better to have them walk away early than find issues later
  • Builds mega trust with potential buyers

• Why Early Disclosure Works:

  • Deals never close without issues being discovered
  • If you lie or hide issues, you risk getting sued
  • When issues are found later, buyers question what else you're hiding
  • First-time entrepreneurs often want to hide issues, but it's the wrong instinct

• Deal Doulas (Experienced Advisors):

  • Help navigate complex transactions
  • Provide emotional support during ups and downs
  • Teach you how to use expensive lawyers and accountants effectively
  • Share judgment from previous deal experience

• Key Deal Considerations:

  • Sometimes taking second-highest offer makes more sense
  • Speed to close is crucial - "shit happens" that can derail deals
  • Board-approved deals have higher likelihood of closing
  • Smaller businesses might be more likely to back out

• Value of Experience:

  • Can't learn these lessons without going through it
  • Hard to know what questions to ask without experience
  • Need someone who's been through 100+ deals
  • Judgment can't be hacked, but can be borrowed through advisors