George Deeb on When a Startup Should Consider a Merger or Acquisition

On the latest episode of the Atlanta Small Business Show, George Deeb, Managing Partner at Red Rocket Ventures, joins Jim Fitzpatrick to discuss mergers and acquisitions. Deeb has been on the show multiple times for his extensive knowledge of business, entrepreneurship, and acquisitions.

Deeb opens the conversation with Jim by discussing which startups should consider M&As. Deeb says that he has seen M&As happening in all industries, stating that a merger or acquisition could help grow a business faster than anticipated. Deeb says that one of the main reasons a company may consider an M&A is for the sake of speed. Companies looking to get an edge on competitors may look towards acquisitions as a way of getting a leg up in their specific market.

“M&A is not just a financial conversation, it’s a strategic business conversation,” says Deeb. “Do these businesses belong together, and can they be more powerful together than they are apart. If the answer to that question is yes, you need to do the deal.”

Deeb then goes into the discussions that take place in deciding which company will run the combined company in a merger. He says that the company that is best equipped to meet the challenges faced by both organizations should be the company to lead the way in the merger. Having someone who knows what needs to be done as far as management goes should be understood on both sides of the deal. Deeb says that many entrepreneurs make the mistake of thinking they are the only person capable of running their business.

Deeb concludes the conversation by talking about how every private equity firm operates differently from one another. However, one commonality among private equity firms is that they are looking for companies with at least $5 million in cash flow. This allows investors to spread their wealth.

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