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Seven Key Factors That Influence Price Negotiations

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Seven Key Factors That Influence Price Negotiations. Using the Fair Market Valuation and the seller's asking price as a starting point, there are seven critical factors that will influence the premium or discount to be applied in reaching a negotiated purchase price package. These seven factors include:. The type of buyer. The general attractiveness of the company. The relative negotiation skill and leverage of the parties. The buyer's experience with prior acquisitions. I Type of Buyer:. Naturally, an a...

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M & A Viewpoint: The Cost of an Acquisition

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M and A Viewpoint: The Cost of an Acquisition. This is the final installment of a three-part series. In the previous installments, we defined. As the theoretical amount. A buyer might pay for a given company and. As the actual amount. That buyer and seller agree upon through negotiations (or a tender offer). This segment will address the costs of a negotiated acquisition. 1 Outside Service Provider Fees. 4 Assimilation and Operating Costs. Outside Service Provider Fees. There are a number of different pr...

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Protecting Acquired Network and Information Assets

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Protecting Acquired Network and Information Assets. A sensible, well-planned acquisition can quickly become a disaster if the company's digital resources are rendered inoperable or if sensitive data falls into the wrong hands. For that reason, the security of the company's digital and network resources should be among management's top priorities during due-diligence and after the transaction closes. In environments where physical access to the company's network is unmonitored, a malicious user has free r...

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Preserving and Unlocking the Value of Acquired Database Assets

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Preserving and Unlocking the Value of Acquired Database Assets. Savvy buyers know that it is too easy to lose customers in the period right after a deal. Speed and agility are essential. Although database integration is easily overshadowed by the financial aspects of the transaction, it needs to be included as part of due diligence and the post-acquisition operational plan. The faster the data can be integrated, the faster it can be used to maintain and develop customer relationships. This problem, obvio...

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Merger Digest - New Look

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The CEO's Guide to M and A Failure. Mergers and acquisitions can be an effective strategy for increasing shareholder value or one’s personal wealth. Unfortunately, research indicates that a majority of M&A deals fail to provide the anticipated benefits. A surprising number don’t build shareholder value and in many cases shareholder wealth is actually destroyed. It also helps to be reactive rather than proactive when it comes to selecting acquisition candidates. Rather than go through all of the plann...

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Acquisition MarketPlace Review - Archives

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Key Phases of the Dealmaking Process. We have identified 15 key phases that need to be diligently handled to make a successful deal. See Article. Mindful dealmakers do deals that deliver the anticipated values and benefits. Mindful dealmakers make good deals because they make good decisions throughout and beyond the process of doing the deal. See Article. What Motivates a Seller? The truly adept buyer is continually attempting to discern what is really motivating the seller to sell. See Article. An overv...

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Forget About EBITDA

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EBITDA remains popular as an earnings base for determining purchase price multiples and investment returns, although its popularity far exceeds its usefulness. In fact, when it comes to acquisition pricing and analysis, EBITDA has a number of serious limitations. Taken together, the risk of using EBITDA is that you may very well pay too much for the following reasons:. EBITDA is the most “gross” earnings base and it gives the appearance that more cash is available than there actually is. FCF-E measures t...

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M&A Viewpoint: The Value, Price and Cost of Acquisitions (part 1 of 3)

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M&A Viewpoint: The Value, Price and Cost of Acquisitions. Part 1 of 3). What is the difference between the value, price and cost of an acquisition and why should you care? After all, the terms are often used interchangeably. It's not uncommon to hear business buyers say: "The seller accepted our valuation of $25 Million." "We paid the seller's price of $25 Million." "That deal cost us $25 Million.". Just what is Fair Market Value? The classic definition of FMV is the price, in terms of cash or equivalent...

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For Buyers Only: The Overpayment Trap

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For Buyers Only: The Overpayment Trap. The factors that contribute to M&A failure have been a topic of a growing number of studies conducted over the last few decades. The results of these studies have appeared in the financial press as well as materials prepared by consultants. The source, methodologies used and specifics of these studies are a subject in and of itself. For our purposes here, there seems to be four fundamental, root causes of M&A failure:. The buyer bought the wrong company (strategy).

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Preparing Monthly Projected Financial Statements for a Valuation

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Preparing Monthly Projected Financial Statements for a Valuation. There are many things more interesting than the subject of monthly financial projections or forecasts. But if you are called upon to prepare them, you will quickly discover that there is very little guidance available on the subject. There are three primary reasons that an analyst would want to include monthly projections as part of a valuation. The process of preparing monthly statements requires a deeper look into the various cyclical, s...