Tag Archives: sell a company

How to Sell a Business: 10 Common Mistakes

Selling a Business: 10 Common Mistakes

Those who founded their companies in the 70s and 80s are entering retirement age. In many cases, their children have chosen other paths, leaving them without a generational relay. This coincides with the current great liquidity, economic optimism and low interest rates, which is leading to many sales of companies in our country. The usual thing is that, if it is the first time that an entrepreneur sells his company, it is easy to make mistakes due to inexperience. Since selling a business is much more complex than it may seem, we would like to point out ten mistakes that many entrepreneurs make when selling. Avoiding them will not only allow them to complete the operation, but it will help them maximize their income.

10 common mistakes when selling a business

1 Do not make a firm assessment of the company

If the employer does not know what the company really is worth, because it is difficult to negotiate with rational arguments. It could be asking for an unreal price and therefore losing prospective buyers willing to pay a possible price.

Negotiating on a basis of desires and not the objective data often leads to the breakdown of negotiations. If we only look at our desires, and do not make the effort to understand the value we bring to the other side, we can hardly negotiate with quality.

2 Change interests or motivations during the sales process 

A previous and serene reflection on why we sell and what we want to do after the sale is fundamental. If the employer is not clear, his own emotions can betray him and harm the operation.

The buyer may notice strange things in the owners’ attitude and this will generate concern, interpret that they are not being sincere, that they are hiding information (he doesn’t know the internal struggle of feelings) and begin to distrust the operation. It triggers their perception of risk and inevitably lowers the value assigned to the company.

3 Negotiate with a single buyer

In a negotiation with a single buyer, he always finds out that he is alone. In those cases, the buyer plays with the time and the wear and tear, thus lengthening the deadlines by requesting more and more concessions.

4 Not managing the process with confidentiality

The lack of confidentiality can cause key managers to abandon the ship and create uncertainty in the market about the future of the company. After the time different actors comment “This company must have problems because it has been on sale since time without success”, undermining the perceived value of the company.

5 Facing only the process, not hiring advisors

The sale of a company is a laborious process that consumes many hours; It requires professional advisors who have experienced this type of situation many times and know how to disable the traps that the buyer tends. Entrepreneurs must focus on improving the company’s results, while monitoring the advisors and demanding that they be informed of each step they take. Without advisers it is very difficult to maintain confidentiality and to make a rigorous search process of the best possible buyer for the company.

6 Dismissing the business during the sale

Experience has shown me that if the owner only negotiates, negotiations with buyers are often irreparably broken. There can be a situation that, at a time in the process, the seller realizes that he has made a mistake and that there is no turning back and that will harm the value. Because of this, the rope is tense in the negotiation and it evidently ends up breaking.

The result is that the owner must start a new buyer search process, which implies neglecting the company even more.

7 Find the buyer in the local area

If you look for confidentiality, this is probably not the best option. Nor is it clear that prospective national buyers are the best buyers or those to whom the company can create more value, nor the ones that can pay more for it.

BANNER: REASONS FOR SALE

 

8 Do not assume that there are other minority shareholders

It is fundamental that there is an alignment of all the shareholders, thus avoiding last minute surprises that lead to the fret of the operation after the costs are incurred and so much work has been developed by all parties.

It’s a mistake to think “they’ll get into the operation when I tell the minority shareholders, they sure will be happy to sell.” We need for those people to share the things that affect us because we don’t like to be taken for granted.

9 Wanting to sell in a hurry 

Hastiness is very bad counselor. It greatly undermines the negotiating and search process of the best buyer. The other party notices the rush. On one hand, it will arouse mistrust, and on the other, you will give him margins to press in with demands.

10 Do not plan the process

An orderly sales process maximizes the value. The disorder causes them to lose pieces of value in each of the phases. When the disorder arises, so do the surprises for the buyer and these are always seen as elements of risk that make them lower their perceived value on the company.

Experience indicates that an unplanned sales process is much longer and, given the complexity of selling a company, the chances of failure skyrocket.

 

For many entrepreneurs selling a business is the most important operation of their lives, so avoiding these mistakes is of vital importance for your company and for your assets. To take the right decisions, you may need help from experienced advisors. Don’t hesitate to contact us for a strategic advisory!

CONTACT OUR TEAM

Is This the Best Time to Sell a Business?

Sell a Business: Is This the Best Time?

Many business owners are breathing easier because their companies are growing again in billing and profits. Until recently they thought of selling and resting or retiring, of moving to a less turbulent lifestyle. Now they are being to doubt. They no longer know whether to sell the business or launch themselves into an investment.

In the world of buying and selling companies, the best thing is to go against the grain. When you no longer feel like it, it’s usually the best time to do it.

The three reasons that indicate that we are in the best moment to begin the process of selling a company are:

Top moment of a bullish economic cycle. How this affects to sell a business

The most advisable thing is to sell a business at a peak moment of a bullish economic cycle. There is more abundance of money, the stock markets are at historic highs and buyers are much more optimistic. In these times of economic boom it is easier for buyers to finance themselves to acquire, either through banks or by issuing corporate data, which allows them to pay even more.

Interest rates are at historical minimums

An external element that is vital to determine the value of a company are the interest rates. If the rates are low, companies are worth more mathematically.

Interest rates have never been as low as now. Companies have never been worth so much. The rates will inevitably rise again with inflation.

Ocean of unprecedented liquidity

A radical set of policies to get out of the 2008 financial crisis has provoked an ocean of liquidity of unprecedented proportions. Money in the hands of venture capital is at record highs, central bank balance sheets are inflated and the liquidity of listed companies is causing a wave of sectoral concentration. You know your sector. If the wave has started, it will change its competitive structure and the margins will suffer more. The last ones that remain without participating in the concentration will not be able to hold on.

The sale of a company is one of the most important decisions that an entrepreneur makes in his business life. On many occasions, although he has powerful reasons to do so, he looks for excuses and arguments not to take that first step. Indecisiveness is an attitude that also has consequences.

If an entrepreneur resolves to deal with the sale or search for investors for his company, my recommendation is to not look for a buyer, but to look for the one who creates the most value for the company and its employees; according to my experience, it will most likely be a foreign group, since they will have less redundancy, it will give them more space for growth and they will appreciate the added value offered by accessing a new market.

The 3 Main Errors in the Sale of a Company

Main Errors in the Sale of a Company

After talking about the opportunity to get the seller to finance your acquisition, today we discuss the three main mistakes in the sale of a company.

1. Manage Confidentiality

The first mistake is not managing confidentiality. The sale of a company has to be a confidential process in which the entrepreneur, accompanied by financial advisors, shows the company only to those who really have the interest and ability to buy the company. Therefore, you should not present your company to several intermediaries given it will be difficult to manage the confidentiality of the sale process.

What you must do is choose an advisor; only one that is to be used throughout the whole process. They will take care of confidentiality, so to ensure that the whole market will not know about the company that you are selling.

Additionally, in the event that the company not been sold, it would produce a negative perception about your client. The sales process of companies have to be fast and directed to investors that are really interested.

2. Move the Company to a Local Area

The second major error in the sale of a company is to focus the sales process to a local area. The best buyer is probably not in your country, let alone not in your area.

You have to make a broad approach. You have created a lot of value for many years and what does not make sense is to sell to the wrong person or sell the company quickly to the first buyer that shows interest.

Find the one that fits the best and has the greatest capacity within their reserve to pay for the value of your company.

3. Not Using Experienced Consultants

Do not face the process alone! The buyers will bring very experienced advisers, and you must too. Use experienced advisors: there are many pitfalls in a company’s sales process!

There was a case of a customer who was pressuring the buyer to sign the price on offer that they had already submitted, but the offer they had made was on the value of the company and not on the value of the shares. The value of the company had to be subtracted from the debt and, once the debt was subtracted, the value of the shares was very low.

If he had agreed to sign the transaction without understanding the difference between the value of the company and the value of the shares, he would have committed and placed himself in exclusivity with an inadequate buyer who had also given him a penalty clause in case he left the negotiations. As such, he would have been caught in a very complicated sale if it went ahead.

The advisors know how to help you get out of unwanted situations. Count on them, trust them and do not let the buyer fool you! On many occasions the buyer wants your advisors to not be there. He tells you that it is better not to talk to them because they make the process difficult. Ignore this suggestion, they are there to help you!

The advisors will create impediments during wrong processes, in order to help you achieve a proper process, and to ultimately protect your interests during the negotiation of the sale of the company. They know how to manage it because they are experienced and have been part of many operations.

Therefore, it is essential to use advisors who have real experience, who are not intermediaries, who are professionals in finance and corporate operations. Selling a company is a very complex aspect in which there are many elements to monitor and deal with. Do not ever put yourself in the hands of intermediaries, put yourself in the hands of advisers!

If you consider the sale of your company, and neglect the 3 main mistakes in the sales process, you will have to go through different stages to help you maximize the final price. Do you know which ones they are? Download the eBook “HOW TO MAXIMIZE THE PRICE OF YOUR COMPANY” where, in a simple way, we explain how to prepare the company for sale.

DOWNLOAD THE EBOOK

8 negotiation techniques when selling a business

Selling a business: negotiation techniques

Selling your business is no easy task. Here are 8 negotiation techniques you should know in order to maximize its sale value.

First steps when selling a business

1. Prepare the company for the sale. If you were to sell your house, you would take the time to fix it and make it look as appealing as possible to buyers. The same applies to your company. For example, there are some financial figures that you should improve to make your company look more attractive to investors.

2. Know what it is worth. You should understand your company’s valuation. You should not share this information with the buyer, but you should understand what the drivers of the value are in order to be prepared for the negotiation.

3. Have alternatives. Having back-ups is key, and in order to find alternatives, you must look for them. It is not a good idea to sell your company to the first buyer that comes across. You have to create alternatives by looking for those that have the best financial capacity in the business world.

4. Create the right setting. You need to make sure you create the right setting. The appropriate people must be at the negotiation table. You have to understand the key people and what their interests are because different players may have conflicting interests.

Learn, be ambitious and don’t be the sole decision maker: don’t forget this negotiation techniques

5. Learn as much as you can. You should try to build a personal relationship with the buyer and measure the situational power. Knowledge is power, so you have to understand what the other person knows about you.

6. Be ambitious. You should try to be ambitious and throw down the anchor. However, you should be sensible. It should be done in a reasonable way using reasonable arguments. Sometimes, it is not a matter of what you ask but rather how you ask it.

 

WHEN YOU NEGOTIATE THE SALE OF YOUR BUSINESS, A USEFUL M&A NEGOTIATION STRATEGY IS TO ANCHOR THE NEGOTIATION FROM THE TOP WITH AN AGGRESSIVE DEMAND. LEARN MORE ABOUT IT READING “KEY FOR M&A NEGOTIATION STRATEGY: THROW DOWN YOUR ANCHOR

 

7. Start the negotiation with the most problematic point. The tendency is to start the negotiation with the easiest topics and leave the problematic topics for last. However, this is a big mistake. The toughest things should be discussed and sorted out at the beginning of the discussions when both parties are excited about the deal so the issues can be easily ironed out. Whereas, when these items are left for last, when each little wrinkle could be really problematic, the chances of finding common ground become slim to none.

8. Have a team of advisors. You should always have a team that you can rely on. You should never be the sole decision maker for your party. In negotiations, this will help you give the impression that you are not the whistleblower and that you need to consult issues with your advisors.

If you want to learn more about it, feel free to listen to our new podcast:

10 most common reasons to sell a business

Common reasons to sell a business

In this article, Enrique Quemada, ONEtoONE President, tell us the 10 most common reasons why entrepreneurs sell their business. Let’s begin!

Internal and personal common reasons why entrepreneurs sell their business

1. Preparing for retirement: this is a very personal reason to sell a business. There are businessmen who, at 55, decide they have enough money and “have done it all”, they no longer feel the urge to continue fighting and would rather focus on other pastimes, such as travel. Others prefer not to retire until 70. If a businessman is 63 and wants to sell his company and retire in two years, it is always a good idea to start preparing the company for sale.

2. Health problems: you only live once and if your health fails you it may be best to let go of the company so that you can spend the time you have left with your family, without the trouble and demands of your company.

3. Lack of interest in continuing the business on the part of the children or a lack of preparation: the owner must understand and accept that his children want to pursue different paths from him.

4. Conflict of interests between shareholders: one of them doesn’t want to continue or there are disagreements about the correct course for the company. This makes decision-making difficult and compromises the competitive future of the company.

5. Need for a new injection of resources: The need for capital increase in order to stay competitive is very common. It is possible that an owner, especially when he is getting along in life, isn’t willing to reinvest the capital that he has made from the company and prefers to sell.

DOES YOUR COMPANY NEED A NEW INJECTION OF RESOURCES? HAVE A LOOK AT “REACT TO YOUR COMPANY’S NEED FOR CAPITAL BEFORE IT IS TOO LATE“!

External common reasons why entrepreneurs sell their businesses

6. The entry of a powerful competitor into the sector: sometimes a company has developed a market and made it attractive enough for a bigger player to come in as a competitor. This is what happened with Netscape in the browser market when Microsoft appeared. Netscape resisted, and failed.

7. End of an upward economic cycle: the mature businessman faced with a cyclical change decides to sell the company. As a businessman once said to me, “I’m already rich. I don’t need to spend the last years of my life fighting an economic crisis”.

8. You receive a good offer for the company: upon analysis of the offer, it is clear that more value will be obtained accepting the offer than continuing to manage the company. This means that the buyer is paying a price greater than the embedded value and is sharing, as we will later see, the value of synergies or, simply, overvaluing it.

9. Changes in sector regulations: for example, new phyto-sanitary requirements may mean significant investments that make it impossible to be profitable given the current size of the company. One way to survive and keep the existing value of the current capacity (clients, brand, products, and technology) is to become part of a larger group.

10. Change of business or simultaneous dedication to more profitable companies that require more attention: sometimes you find that another business you started is more profitable, requires less effort, has a brighter future or, simply, brings you more satisfaction.

Why sell a business when legislation changes come

Why sell a business when legislation changes

In this article, we briefly discuss why sell a business when new legislation changes negatively affect companies’ growth. We will also tell you the story about a client running a business in the chicken farming sector who finally decided to sell his company because of these changes. Let’s go!

Legislation changes could affect your business

It is common for new laws to cause a lot of stress for companies. In many cases, business owners can foresee the change coming because they are also operating in other countries that have already gone through a similar process. That is why they can take the initiative and sell before this causes a crisis.

Other times, a regulatory change requiring a strong investment creates a need for external capital because the internal cash flow generation is not enough. For example, new regulation might require important investment that the business cannot afford because of its size or growth path.

This situation happened to us with a client in the chicken farming sector. A new animal protection legislation required an increase in the standard of living of the hens, which meant important capital requirements. Our client was not willing to risk his own capital for the needed investments and was afraid of asking for debt, fearing the free cash flow produced by his business would not be able to pay it. After we analyzed and discussed the alternatives, the client decided to sell. We had a Dutch group and an Italian group bidding against one another. It was the Dutch group who eventually won the bid for the company.

THE NEED FOR AN INCREASE IN CAPITAL TO STAY COMPETITIVE IS VERY COMMON. DO YOU WANT TO LEARN MORE ABOUT IT? HAVE A LOOK AT “REACT TO YOUR COMPANY’S NEED FOR CAPITAL BEFORE IT IS TOO LATE!”, YOU WILL FIND AN INTERESTING STORY ABOUT A CLIENT WORKING IN THE MANUFACTURING OF MACHINERY FOR FOOD PRESERVATION.

Do not wait until it is too late

One way to survive and maintain the value of the assets (clients, brand, products, technology, etc.) is to merge into a larger group. Many business owners wait until it is too late. They do not want to recognize how critical the change is.

If you want your company to survive when there is a critical change in your business environment, react with urgency because the finding of a good buyer and all the negotiation process will take time.

This article was written by Enrique Quemada, ONEtoONE President.

Study your buyer

BEFORE ACCEPTING AN OFFER, STUDY THE BUYER

Many business executives wait for a buyer to show up someday, never stopping to think about the flawed logic of accepting an offer and selling the company to whoever gets there first. Is this the best buyer? Is this the one who can pay the most? It will be a remarkable coincidence if it is. It is much more likely that it is not. Also, since they are the only buyers, their bargaining power is far superior to yours.

The importance of research

If you want to maximize sale value, you, or the advisors you hire, must go through a rigorous process of finding the best buyers or investors. Buyers will be those who have the best synergies with your company, who are the strongest financially and who recognize the strategy—the value of your company (wherever they are). Then, you will have to make them compete to increase the price.

YOU MAY ALSO BE INTERESTED IN, “NEGOTIATION IS YOUR POWER WHEN SELLING A BUSINESS”.

Price is not one-dimensional

Price is an essential aspect of any negotiation, but the likelihood of closing the deal also lies in who we give exclusivity to for due diligence. We may receive an excellent offer from someone who has little hope of obtaining financing or who is known to negotiate hard at the final stage after due diligence.

Therefore, before accepting an offer, it is good to study the buyer’s actual financial capacity and acquisition history. By studying how he has performed in previous acquisitions, you will learn a lot about his behaviour. Once you grant exclusivity to a buyer and tell other potential buyers that you have accepted another offer, it will be more challenging to go back to them and get them interested again.

Enrique Quemada, president of ONEtoONE Corporate Finance, has written this article.

YOU MAY ALSO BE INTERESTED IN, “WHAT SKYDIVING AND SELLING YOUR COMPANY HAVE IN COMMON”.

Everybody is selling their business - and you?

Everybody is selling their business!

The M&A wave is rampant. Never have prices been as high as today. Never has there been so much liquidity in the system. Never have interest rates been so low, so never has it been this easy to borrow money. Hence, we could say everybody is taking the chance of selling their business.

The M&A wave of today

At the same time, the fate of individual companies has never been more uncertain, and the window of opportunity is closing for many companies unprepared or unable to adapt to the new market realities.

The current technological revolution is defining the fate of many companies: Unmet customer expectations are resulting in churn; the lack of digital transformation gains is translating into loss of market share; industry lines that protected some are crumbling; the longstanding, durable business models are failing.

In life, change is unavoidable, but in business it is vital. When the speed of change outside your company is greater than the speed of change within it, the end is just a question of time. Today, new business models are emerging, which are allowing the revolution of sectors.

When to sell your business

It is very common that business executives do not want to sell their company when it is making the most profit and will when it is going through a crisis. This is a clear mistake. For those who have taken the risk of entering the entrepreneurial world, selecting the right moment to exit is one of the most important and delicate moments in the life of a company and, hence, where there is the greatest need to act the most professionally.

Today, money is abundant. The value of companies in the stock market have never been higher, interest rates worldwide are at the lowest levels ever seen, and there is a huge M&A wave. Ride the wave before it goes and you regret it.

This article was written by Enrique Quemada – President of ONEtoONE. Book: How to Maximize the price of my company

Your might also be interested in “WHAT SKYDIVING AND SELLING YOUR COMPANY HAVE IN COMMON”.

Negotiation is your power when selling a business

Negotiation is power when selling a business

Power is very relative. When selling a business, during a negotiation this power will depend on your alternatives and the alternatives of the other party. Don’t forget that emotions are more than 50% of a negotiation.

Verify the power of the other party, it is normally overestimated

In a negotiation, perceptions are crucial. It’s fundamental that you understand the other party’s perceptions and that you keep them in mind. Once you know your interests and your limits do the same with the other party. A negotiation is a game of information and information gives you power. Try to understand your needs instead of your wishes.

There are many ways to discover the other party’s interests. Sometimes, it surprises me to see how little homework business owners do in such an important situation. If the buyer has acquired other companies, you should analyze how those deals were, in what conditions he bought, the multiples he paid and why he was interested in the company. All this information is worth a lot, so if you don’t have time to find it all out you should subcontract someone.

ONEtoONE negotiation experience when selling a business

Some years ago, we had a sale mandate for a French company. They had an offer from a big private equity firm that was doing a buildup (concentrating a sector via acquisitions) of its sector. Our client had already verbally negotiated with them for a price of 20 million Dollars, but they didn’t know how to continue with the process, so they asked for our help. We asked him for permission to reopen negotiations and he agreed. The first thing we did was to study all the deals the buyer had done in other countries and the multiples he had paid. We also studied how much money the private equity firm had for the consolidation project, they had spoken about it to the press. When we began negotiations, we already knew how much they would be willing to pay and what role our client’s company played in the consolidation process. We even thought we knew how the announcement of the transaction would affect its price in the Stock Market. All of this let us increase the asking price to 42 million Dollars. As we were flying back, the buyer rang our client and told him we had been very hard in the negotiation and asked him to agree the price of 40 million Dollars. Our client accepted the offer and we didn’t have the strength to go back for the 42 million!

This experience taught us that business owners have to be very careful with any concessions they give. If you have professional advisors working on the negotiation for you then don’t make any “spontaneous” interventions unless agreed upon and prepared in advance. Naturally, you have more power when you have alternative options, so before giving exclusivity you should clarify all the important aspects of the agreement. Once you give exclusivity and start negotiating with one sole buyer, you will have less negotiating power and the ‘power’ will be on the other side.

The person who is most comfortable with the current situation has the most situational power; the person who needs more change will have less power. The key to understanding who has the most power or leverage in every moment is to analyze which party has the most to lose in this moment if there is no agreement. The person who has the most to lose has less situational power. Your mission is to manage the situation so that your counterparty has more to lose than you.

The situational power

There’s a point in which you have more situational power: it’s when the other party makes an offer and you don’t accept, it’s the moment in which you have the strength to improve the negotiation, you have the most leverage.

I recommend that every time you receive an offer you act alarmed, as if it seems low to you. This will mean that the other party will give in a bit if he can or he remains satisfied with what he’s got if he can’t give in.

Always remember that situational power is based on perceptions, not on facts. You have leverage if the other party thinks you do, if he thinks you have a strong position then you have it. Therefore, be careful with what signals you give off.

If you want to learn more about it, feel free to listen to our new podcast:

This article was written by Enrique Quemada – ONEtoONE President

Your might also be interested in “WHAT SKYDIVING AND SELLING YOUR COMPANY HAVE IN COMMON”.

Why you need a professional for selling your company

What skydiving and selling your company have in common

In this article, written by Jeroen Maudens (ONEtoONE Partner in Belgium), we will discover that selling your company has something in common with skydiving. As in skydiving, to sell your company you need someone to team up with, a guide, a professional, an advisor. The jump is yours. The decision is yours. The company is yours. The guidance is not.

Selling your company and the skydiving metaphor

Skydiving is crazy stuff, we all agree on that one, don’t we? It is not natural to us. Most people think about it for months or years before they actually take action and book D-Day in their calendars. Before committing we make sure to get the right place to jump (I had mine in SPA, Belgium) with the best instructors and, preferably, a record of low to zero accidents! Bizarre, skydiving is not rocket science. You just go to the airport, check the parachute, do the safety drill, read the instructions, suit up, board a plane and jump out. Voila, done, piece of cake!

Yet nobody does this on their first attempt, we all go tandem. We all wish to be in the safe hands of a professional instructor. Someone that has done it many times before and still goes home every evening in full health. Why? Because you would risk not pulling the string up there? No. You would end up in a rollercoaster of emotions and pull the string too soon… or too late? Due to the sensation you might forget how to carefully navigate towards the dedicated landing spot or use the wrong technique in landing, since it is your first time and risk breaking a leg doing so. In the worst-case scenario, you end up paralysed or even death.

The most probable scenario though, is that you will not jump at all. You will back out at the exact moment when the door opens, and you see 4,000 meters of air and clouds between yourself and planet earth. On the moment of truth, you will step back, tell yourself it is not worth risking your life and keep on wondering your whole life how it would have been to have jumped, to have done it. You will hear about the amazing sensation of freedom, and you will never have experienced it yourself.

How does skydiving relate to selling your company?

Selling your company is a once in a lifetime operation for most people. Yet many try to do it all by themselves. It is the financial operation of a lifetime, the fruit of years of hard labour and sometimes financial struggle, hard decisions and risky investments.

Just because you know your company best, you might think that the best salesman for your company is… you. Wrong! You might learn how to prepare, valuate and market a company. Many books describe what a structured auction should look like and you can find templates for NDA’s, non-binding offers, binding offers, LOI’s and SPA’s all over the internet.

The lowest price is not always the best deal.

One thing though you do not have: The experience of the right mix in timing, nuances, finesse, experience and contacts to create the upside you deserve in your once in a lifetime operation. You need someone alongside you that manages the process and guides you through negotiations when emotion takes control of you. You need somebody to give you that push when you feel like backing out last minute because of fear of the unknown. You need an expert in selling companies, not a manual on how to sell your company. You need someone to team up with, a coach, a guide, a professional, an advisor, a friend. The jump is yours. The decision is yours. The company is yours. The guidance is not. Do not jump alone, get help.

 

If you are interested in learning more about selling a company, take a look at SELLING YOUR COMPANY AND THE IRREPLACEABILITY PARADOX.