Everyone says we are in a buyers’ market – especially buyers.  I say, if you think this is a buyers’ market, just wait a few months.  It is almost impossible to get deals done right now because management teams, boards and investors are unpredictable.  A deal goes into LOI and is a week from closing, and the CEO at the acquiring company watches CNN Financial News one morning, panics, and pull the plug.  A Fortune 50 tech company signs a tech eval agreement, receives binaries for review, and two hours later submits an offer at 60% of the price that had been discussed.  Investors agree to put a million into a company one day, and then try to call their prior investment the next.

There is a lot of data supporting the premise that valuations are down.  There is little or no data tracking execution risk.  How many deals blow up between LOI and closing?  How many investments are re-priced an hour before closing to the benefit of the investors?

The short-term opportunities that will create long term value will go to the very few players out there who remain capable of pragmatic, good-faith execution on transactions.  When sellers and entrepreneurs start to understand the true meaning of execution risk, they will take the lowest offer if it means a) they get the deal done and b) they don’t need to shower afterward.