It’s a simple assessment of a story’s worth by imagining that, if one was to walk into a pub filled with the paper’s readership, what proportion of punters would stop to listen to a news story upon hearing the headline and opening paragraph.
It is a hugely simple test, yet utterly effective.
So it was reassuring to hear that corporate financiers have a similar test, in asking if they would be willing to buy the owner of a possible acquisition a pint.
First, it shows that personality still plays a major role in deal making, despite a seemingly relentless drive to stamp out all but the most measurable aspects of a transaction.
But secondly, it shows potential entrants to the world of corporate finance that it isn’t such a dark art after-all.
While due diligence, fact-checking and number crunching all play an important role in the decision-making process of mergers and acquisitions, so do the far more basic and understandable tricks of common sense and trusting to instinct.
If the owner of a prospective acquisition is viewed with some suspicion and, as a prospective suitor, you would much rather spend an afternoon with the mother-in-law than share a lunchtime pint with him or her, their business is probably best left alone. Rocket science it isn’t, but ensuring that you only deal with trustworthy people could save you problems down the line.
David Rae is deputy news editor of Accountancy Age
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