- Original Poster
- #1
As some of you know, I work in M&A.
One of the big problems in M&A is the £1 Charlie (a subject I've ranted about a bit in the past). £1 Charlies are people who have no money, no experience in running businesses, no assets behind them but try to take ownership of successful and profitable businesses (usually by fiddling the owner).
They believe that they can use a combination of seller financing, borrowing against the assets of the target business etc etc. and not shell out any cash themselves. The problem is that they don't disclose this intent at the start. They pose as funded buyers, pretend to be experienced M&A players etc.
But even outside of £1 Charlies, any vendor (or their business broker) needs to vet every party properly before letting them into the process of NDA, Information Memorandum etc and then providing them accounts, management accounts and other sensitive data.
In a poll I did with business brokers / intermediaries, a large majority of them say they spend more than 20 minutes vetting each buyer. 20+ minutes on every single one. Given that the average lower mid-market business attracts anywhere between 50 to 100 potential buyers, that's a TON of time wasted on vetting. To make it worse, £1 Charlies and others are getting cleverer at faking signals.
So I'm looking for suggestions on how the industry could possibly address this problem. Brokers / intermediaries want to check financial soundness, background of the person, their previous experience in business, their history with acquisitions (and therefore their familiarity with the M&A process) etc.
They could possibly use something like the Plaid API (as suggested in a similar discussion in this Reddit thread) or Finicity / Akoya / Teller to do a bank balance verification, sure, but what about all the rest? Any easy way to automate any (or part) of it instead of manually going through Companies House, social media, credit checks etc etc? One wants to know as much as possible about the individual/s (or entity) making the approach.
Your thoughts?
One of the big problems in M&A is the £1 Charlie (a subject I've ranted about a bit in the past). £1 Charlies are people who have no money, no experience in running businesses, no assets behind them but try to take ownership of successful and profitable businesses (usually by fiddling the owner).
They believe that they can use a combination of seller financing, borrowing against the assets of the target business etc etc. and not shell out any cash themselves. The problem is that they don't disclose this intent at the start. They pose as funded buyers, pretend to be experienced M&A players etc.
But even outside of £1 Charlies, any vendor (or their business broker) needs to vet every party properly before letting them into the process of NDA, Information Memorandum etc and then providing them accounts, management accounts and other sensitive data.
In a poll I did with business brokers / intermediaries, a large majority of them say they spend more than 20 minutes vetting each buyer. 20+ minutes on every single one. Given that the average lower mid-market business attracts anywhere between 50 to 100 potential buyers, that's a TON of time wasted on vetting. To make it worse, £1 Charlies and others are getting cleverer at faking signals.
So I'm looking for suggestions on how the industry could possibly address this problem. Brokers / intermediaries want to check financial soundness, background of the person, their previous experience in business, their history with acquisitions (and therefore their familiarity with the M&A process) etc.
They could possibly use something like the Plaid API (as suggested in a similar discussion in this Reddit thread) or Finicity / Akoya / Teller to do a bank balance verification, sure, but what about all the rest? Any easy way to automate any (or part) of it instead of manually going through Companies House, social media, credit checks etc etc? One wants to know as much as possible about the individual/s (or entity) making the approach.
Your thoughts?
