‘WALK-IN, WALK-OUT’ – Transactions

WIWO deals are no doubt the riskiest transactions in the market - for both sides of the deal. Which raises the question(s), why would anyone enter one? why and how do they arise? what do we do to complete? and how do you ever properly value a WIWO?

Author

Jadeja Partners

Date

Tuesday, 10th March 2020

2 min read

WIWO deals are no doubt the riskiest transactions in the market - for both sides of the deal. Which raises the question(s), why would anyone enter one? why and how do they arise? what do we do to complete? and how do you ever properly value a WIWO?

On the surface a WIWO deal seems simple but let’s at least be aware of the following:

 

Why would you?

Everything amortised long enough will even itself out… The attraction to these deals is the old Risk vs Reward and the reward can be enormous.

With terms favouring the brave.. why wouldn’t you?

 

Circumstances on the Vendors’ side

HEALTH: Minor injury, debilitating illness and the good old misadventure

TERMINAL DESTINATION: Death and Taxes, we work one side we eventually meet the other.

GOVERNMENT INSTITUTIONAL HOLIDAY: Yes, Accountants go here too – unfortunately

 

Circumstances on Purchasers’ side

Awareness of opportunity comes about from a Colleague, a Friend or even a Discussion Group – it’s a small industry and can lack anonymity. If a Broker is appointed, they will know the go to people for quick transaction ensuring anonymity and completion. The brokers normally know candidates that can handle this type of deal immediately.

 

Valuations

Expect to discount if you demand a WIWO as the vendor

Expect heavily reduced upfront, starting at say 25c in the dollar (maybe) – if incapacitated

Transactions can be formulated over multiple years to bring the price up towards market

Generally there are no clawbacks

 

Mindful Factors 

Tougher terms are common due to lack of handover and fallout risk

Buyers do like theses types of deals; they have the freedom to drive it as they like

Family members and Coworkers of the vendor are generally nervous throughout the process

Beware of the external vulture and more importantly the internal vulture

 

Timing & Pace

Act now, act fast and with a sense of urgency as these types of transactions dissolve quickly – this goes or both sides.

 

External Advice 

External guidance for both sides can help maintain your business and the new business generated and help you extract the diamonds in the rough whilst maintaining client satisfaction as the two are integrated. Integration focus of the following are imperative: Client, Staff, Culture, WIP, Debtors, Software

 

Don’t forget, charge out rates!

 

Let’s Talk Market, Let’s Talk Options – Discretion ensured

Magnus Yoshikawa 0408885944

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By the way, if you can help us… we are seeking:

Vendors wishing to / pondering a phase out in the next 2~5 years

Vendors with REVENUE between 500k and 10m+

Merger Candidates with REVENUE between 3m and 10m+

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