Ya Ain’t From Around Here, Are Ya? M&A Lessons from Netflix’s Ozark

Ya Ain’t From Around Here, Are Ya? M&A Lessons from Netflix’s Ozark

“Money is not peace of mind. Money is not happiness. Money is, at its essence, that measure of a man’s choices.” – Martin Byrde. Before we go any further, no… this edition of the business blog is certainly NOT “Money Laundering 101,” but there are some critical M&A  lessons sprinkled in Netflix’s hit show, Ozark. To set the scene: the main character, Marty, makes a series of questionable business choices. One of these choices was to acquire a local seedy business via similarly seedy means. Soon after, an even seedier individual approaches Marty and informs him that he had a “business arrangement” with that prior owner. Drama ensues.

So, what does that tell us about the importance of due diligence in M&A deals? Read on to find out!

A Refresher on Due Diligence

The concept of due diligence is simple, though the implications are not: uncover all of the skeletons that you can reasonably uncover before acquiring or merging with another business. The idea is to take a look under the hood and do more than just a visual scan. This is especially the case if you’re purchasing a business through a stock purchase deal. As a refresher, in a stock purchase, the entity stays the same, but the owners are replaced. The buyer literally steps into the shoes of the seller. As a result, a buyer is more likely to have a prior “business arrangement” or unknown liability creep up post-closing. In an asset purchase, due diligence is similarly critical, particularly to ensure that the assets you are acquiring aren’t encumbered by an unknown and/or undisclosed liability.

Due diligence includes (just to name a few): running lien searches, confirming that the entity is properly set up and registered, identifying all equity holders, confirming that all taxes have been paid, confirming existing employment practices, reviewing key contracts and financial statements, assessing any pending or threatened litigation, and evaluating regulatory compliance.

Due Diligence Gone Bad

As we’ve said in a prior blog, due diligence boils down to mitigating risk. While of course there’s only so much you can control, and your purchase agreement should also provide additional protections and contingencies, the goal is to limit any surprises and liabilities. A worst-case scenario likely won’t be life or death… we hope… but unknown and unplanned obligations and liabilities will lead to litigation, attorneys’ fees, and headaches that you don’t want to waste your time and money dealing with.

To close this out with another Ozark quote: “Nobody wants messy where their money is concerned.”

But fear not! We’re here for you if things get messy, and as always, if you’ve got questions, you know we’ve got answers!

~ The W + K Team