Boiled Frogs

by Charles V. Lemmon
Instead of talking about bulls or bears or pigs, let’s consider the frog aspects of the current merger & acquisition market.
It is well known that you can’t boil a frog by throwing it in boiling water, because it will jump out. Instead, you put the frog in a pot of cool water and then put the pot on the stove. As the water temperature rises, the frog relaxes, goes to sleep and, well, the frog is dead long before the water actually boils.
It may be much the same by being a business owner in the current market. Here we are, happy and comfortable. Ever so relaxed. Suffused with the glow of capital gains.
In this environment, perhaps it is time to identify new primary goals:
1. To be purchased
2. To cash out
It is better to be swallowed up by a corporate behemoth and walk away with a boatload of money, than to be slowly boiled in the pot of complacency.
Remember when you marveled that Microsoft bought upstart Hotmail for hundreds of millions of dollars? Remember when upstart Mercantile Systems was sold for hundreds of millions of dollars before it generated it first dollar of revenue? Don’t you secretly pray that Bill Gates or a similar industry leader will come knocking?
Be honest. Isn’t this the business you would really like to be in? Cashing out. Then, you can build your own sailboat or open a resort in the Grand Caymans.
So, abandon the frog’s life and assume the role of a stallion. Be proactive to plan for a sale. Take action now to properly position your company for its sale.
Buyers look for a number of intangible qualities including organization, growth opportunities, reputation, market conditions, and industry leadership. By documenting improvements that a buyer can make with new capital, you can better present your company and thereby increase its perceived value.
The Deal Makers of our firm are intimately familiar with frogs. We coach seller frogs to jump before the water gets too hot, and we continually kiss buyer frogs to find just the right “prince” of a buyer.

Charles V. Lemmon is President of C.V. Lemmon & ; Co., Inc., a private M&A advisory firm in Dallas, Texas. Charles Lemmon can be contacted by telephone @ (214) 207-9694 or by e-mail at cvlemmon@cvlemmon.com.