We just signed our LOI and are entering the sixty-day due diligence tunnel. How do we prevent our leadership team from getting distracted by the transaction, causing our quarterly performance to slip and giving the buyer an excuse to re-negotiate the purchase price?

Question

Tyler Smith · Accepted Answer

Signing an LOI is only the beginning of a highly vulnerable period. Many owners make the mistake of shifting all their attention to the transaction, leaving a leadership vacuum that causes operational performance to slip just when the buyer is watching most closely. If your numbers dip during this sixty-day window, the buyer will immediately attempt to renegotiate the purchase price or walk away.

To prevent this distraction, you must partition your leadership team. Your Integrator must run the day-to-day business while you, as the Visionary, handle the transaction along with your investment banker and legal counsel. Keep the transaction completely off the weekly Level 10 Meeting agenda.

Your leadership team must remain focused on their quarterly Rocks and weekly metrics. Use your scorecard to monitor the health of your customer acquisition, service delivery, and employee retention on a weekly basis. If a scorecard metric falls off track, use the IDS process to solve the issue immediately.

Ensure your team understands that the best way to secure a successful close is to run the business as if no transaction is happening. By keeping the transaction isolated from daily operations, you maintain the momentum of the company and protect your walk-away leverage.