Don’t Jerk the Trigger
I had the good fortune to be able to shoot guns quite frequently growing up. As a riflery instructor, my father taught me the fundamentals of shooting from a young age, and I was able to complete a youth riflery program sponsored by the NRA. The five fundamentals of marksmanship are simple, but they are not easy:
Body position
Sight to target alignment
Breath control
Squeeze the trigger
Follow-through
Of the five fundamentals, I have always found squeezing the trigger to be the most difficult. It takes more patience than most young men (or adult men) can muster. Fundamentally, success on the firing line comes down to patience. Ohio summers are hot and humid. My shooting outfit consisted of a thick shooting jacket with a sweatshirt underneath for extra padding. The shooting jacket is made to fit very tight, almost like a straight jacket, and I employed my older brother to pull it as tight as possible. Something like a corset for men, it is meant to be so tight on your body that you can feel your heart beating through the jacket (this allows you to time your shots between heartbeats for maximum accuracy). So when the shot finally rings out, it should come as a surprise.
But under those conditions, you don’t want a surprise, you want to force it so that you can rest. Rest your arms, breathe freely, cool off, have a drink, and most importantly, loosen the jacket. The only way to perform well on the firing line is with patience, repeating the process above, alignment, breath control, squeeze the trigger, over and over, until all elements come together just right. If any of the elements are off, the shooter needs to have discipline to stop and reset. In the heat of the moment, that is the hardest thing to do.
The opposite of squeezing the trigger is to jerk the trigger. By doing so, the shooter brings himself back to a place of comfort and relaxation. No need to wait. On the firing line there might be twenty shooters, each will shoot five shots. The last shooters to come off the line, those that apply patience and reset as many times as necessary, despite the conditions, always have the highest scores.
We’ve found buying businesses, and due diligence in particular, to be much like squeezing the trigger. In December, January, and February, when we were simultaneously running due diligence on two deals, it felt very similar to being back on the firing line. Tired of lengthy phone calls, days of analysis, and a recurring need to, yet again, come back to the table and “reset” with the owners and intermediaries, one begins to develop a strong urge to jerk the trigger. Get the purchase agreement together, sign it, and move on. Get it done fast so that we can all relax, unwind, take off the pressure.
However, much like on the firing line, to jerk the trigger is to miss. Skipping steps and lackluster analysis to get the deal done sooner results in missing the mark – missing on price, missing on setup, missing on representations, missing on working capital, and missing on a whole variety of issues that require careful and patient attention.
The urge is enhanced by the fact that all the interested parties would love nothing more than for the buyer to jerk the trigger and get the deal done now. While everyone waits quietly for the final shooter to finish on the firing line, in deal-making, everyone is cheering you on to finish as quickly as possible. The sellers don’t think all of these due diligence questions are necessary, and the intermediary wants to get paid. We’ve even seen intermediaries attempt to cut out the due diligence process entirely by requiring the buyer to move straight to a purchase agreement. All these factors implore the buyer to jerk the trigger, but I’ve done that enough times on the firing line to learn my lesson.
At RPM Capital, we squeeze the trigger – we work to make steady, consistent progress towards closing. In due diligence, issues come up daily: the monthly rent is too high, the consulting agreement is unfavorable, inventory is unknown, working capital is too low, seller representations are too light, and on, and on. The solution is simple, but it’s not easy: to slowly squeeze the trigger, coming back to the negotiating table as many times as necessary to iron out the issues one by one until the deal is ready to be executed on fair and even footing.
BANG!
All of a sudden, everything finally clicks into place. The documents are ready and drafted favorably. The price is fair, and the working capital peg is appropriate. The deal is signed, and when it is, it almost comes as a surprise. Finally, after months of due diligence, and patience under pressure, the deal is executed.
Bullseye!