The objective of M&A is to increase the value of a business. That value can be measured in terms of increased cash flow or a reduced risk profile. When the business press covers a splashy deal, you might hear the buyer’s CEO claim that when the deal closed it “created value” for his or herContinue reading “Post-Merger Integration: What is it and Why Should You Care? “
Category Archives: M&A Basics and Education
The M&A Market’s Rollercoaster Ride
The last five years have witnessed dramatic peaks and troughs in M&A activity. In 2019, we observed strong deal flow fueled by economic confidence, low-interest rates, and sponsor-backed deals. However, early in 2020, almost all but the boldest acquirers halted acquisitions when COVID hit. Deals and deal multiples made a triumphant comeback in 2021, asContinue reading “The M&A Market’s Rollercoaster Ride”
Funding the Deal: Options and Strategies to Finance M&A
Having decided to pursue M&A (or even having found a potential target), a buyer needs to figure out how to finance the transaction. To the uninitiated, this can appear as a choice between using cash on hand and taking on debt. However, several other options are commonly used, and a shrewd buyer will consider themContinue reading “Funding the Deal: Options and Strategies to Finance M&A “
Struggling to Find a Buyer for Your Business; Here’s the Buyer’s Perspective on Why
Take any time to look through online business-for-sale listings and you quickly find 10s of 1000s of businesses listed for sale. What those sites don’t say is that a large proportion of those businesses go unsold. The owners of the businesses are forced to shutter their business or just self-off the assets at pennies onContinue reading “Struggling to Find a Buyer for Your Business; Here’s the Buyer’s Perspective on Why “
Unmasking M&A Valuation Myths: Deal Multiples vs. Discounted Cashflow
The ups and downs in ‘earnings multiples’ is a perennial topic of discussion in the mergers & acquisition (M&A) market. When the M&A market is favorable to sellers, the ratio of the acquired companies’ pre-deal annual profit (EBITDA) relative to the amount paid by the buyers (enterprise value) runs high. When buyers have the upperContinue reading “Unmasking M&A Valuation Myths: Deal Multiples vs. Discounted Cashflow”
Earnouts: Bridging the Valuation Gap and Avoiding Costly Disputes
The Value of Earnouts Earnout structures are a very useful tool in M&A transactions. They are one of the best ways, if not the best way, to bridge the gap between a seller’s price expectation and what the buyer is willing to pay. Earnouts can also be used to ensure that a seller who is keyContinue reading “Earnouts: Bridging the Valuation Gap and Avoiding Costly Disputes”
M&A: Five questions to ask the buyer (and five questions to ask yourself) if you receive an unsolicited approach
Whether it’s welcome or not, many successful businesses will at some point be approached by someone looking to acquire them. Some businesses (especially those that are looking towards a transition in ownership) will anticipate this and be ready to respond. But if your business hasn’t contemplated this possibility yet, here are five questions to askContinue reading “M&A: Five questions to ask the buyer (and five questions to ask yourself) if you receive an unsolicited approach”
What’s More Important, that an Organization Learns or that Its People Do?
At a recent strategy forum in Houston I was struck by something that Latha Ramchand said about the role of learning. Dr Ramchand is Dean at the University of Houston’s C.T. Bauer College of Business and was part of a panel discussing, amongst other things, factors essential to an organization’s long-term growth. She proposed training as one ofContinue reading “What’s More Important, that an Organization Learns or that Its People Do?”
Capita – The (Painful) Limit to Diversification as a Growth Strategy
Last week saw UK company Capita make one of the frankest admissions of failure in corporate strategy that I’ve seen in some time. Jonathan Lewis, the company’s recently appointed CEO, announced to London’s investment community that “significant change” is required and that the company – which employs about 70,000 people and has annual revenues of approximately £5bn ($6.9bn)Continue reading “Capita – The (Painful) Limit to Diversification as a Growth Strategy”
Concept and Perspective 