The following points are some of the things important to
remember in M&A. Joe and I will be expanding our analysis of each of these points in the coming weeks. Obviously,
the list can also be considerably longer.
What is missing? Send us
your favorites as well as examples of the items listed.
1.
Sometimes the best deals are those you don’t
attempt or complete.
2.
Any deal is a bad deal at some price; not every
deal is a good deal at some price.
3.
Negotiate the deal on all aspects (price, form
of payment, contingencies, etc.)
4.
Listen – and remember what you say may not be
what is heard. Also, what is said
may not be what is meant!
5.
Beware of unrealistic projections. Understand the source of
synergies. Why are these synergies
available to you and not other buyers?
6.
Beware the winners curse – you win the auction
not because you are the smartest, but because – you paid the highest price.
7.
Most deals fail to reach their full potential
because of issues in integration. Don’t underestimate the costs and problems of
integration.
8.
In mergers, 2+2 can equal 5, (3 is also a
distinct possibility)!
9.
Think strategically, but understand that your
competition is doing the same.
10. Value does
not equal price. As our
friend Bob Bruner has noted, Price is what you pay, Value is what you estimate.
11. Establish
a walk-away price up-front. Don't be afraid to walk away. (See point 1!)
12. Do not
over borrow.
13. Assess
risk not just reward.
14. Due
diligence is key, or as President Reagan used to say-trust, but verify.
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What is missing? Help add
to the list.
Ralph
Ralph
Don't let the accountants and lawyers convince you to do a deal if it doesn't feel right. They get paid whether you do a deal or not.
ReplyDeleteJC Excellent. Also true for IB's.
ReplyDelete