Acquisition Marketplace Review - The Journal of Applied M & A Theory

M&A Outlook for 2008 (posted 11/05/07)

MoneySoft has not released an M&A Outlook since July 2005. At that time conditions were favorable for M&A activity and we projected that deal activity would increase by 5% to 8%.  Data provided by FactSet Mergerstat indicates that the deal activity increased by 6.7%. The new Outlook examines the current M&A market and our expectations for the future.

See the NEW MoneySoft 2008 M&A Outlook.

Modeling Mistakes Can Lead to Overpayment  (posted 11/13/07)

Insufficient or inadequate analysis of an acquisition candidate is an invitation for calamity—the proverbial equivalent of running with scissors.  In fact, studies have listed “insufficient analysis” as one of the leading causes of M&A failure.   By not performing a diligent and complete analysis, a buyer significantly increases the risk of stepping into the overpayment trap. See Article.

Strategies to Avoid the Overpayment Trap
The Overpayment Trap (see Vol. 5 No. 1 Acquisition MarketPlace® Review) explored how the M&A process is oriented toward getting sellers top dollar for their companies. Becoming mindful of the overpayment trap and deciding to take proactive measures to avoid it are essential first steps. This article provides specific strategies and techniques that you can use to avoid overpaying for a friendly acquisition.

For Buyers Only : The Overpayment Trap
Overpayment is one of several reasons why M&A deals fail. On the other hand, paying the “right price” is not only healthier for your wallet; it helps reduce the risks of post-acquisition assimilation and integration. This article points out how the overpayment trap is set so you can side-step it. See Article.

Forget About EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is often used in valuation and pricing multiples. Despite being popular, its overuse can be hazardous to a buyer’s financial health. See Article.

Avoiding the Overpayment Trap
Being aware of the overpayment trap helps you side-step it. However, one of the best ways to avoid it is to use a standardized and disciplined approach to valuation, financial simulation and Free Cash Flow ROI modeling. This article examines the elements of sound pricing and presents a practical approach to arriving at prices that make economic sense. See Article.

Other articles:

M&A Viewpoint: The Cost of an Acquisition
This is the final installment of a three-part series. The previous installments focused on market value and purchase price. The purchase price paid is not the cost of an acquisition. The price is the portion of the cost that is paid to the seller(s). However, there are other costs beside the price package. Depending upon the size and complexity of a transaction, acquisition-related costs can add another 10% to 15% or more to the actual dollar cost of the transaction. That is not a trivial number! This article will help you identify, control and manage the costs of a negotiated acquisition. See Article

Do-It-Yourself M&A Background Checks
Author and educator Tom Taulli makes the case on the importance of checking the background of the principals to a potential M&A deal. He also provides a number of valuable sources of information. See Article

Preparing Monthly Projected Financial Statements for a Valuation
This article provides an overview of the reasons for including monthly projections in a valuation; the issues to be considered by an analyst when including them and considerations that will help an analyst prepare a more diligent set of projections.See Article

The CEO’s Guide to M&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. See Article

M&A Viewpoint: Pricing Acquisitions
A fair market valuation of an acquisition candidate provides a reference point for establishing and negotiating purchase price and terms. In this second of a three-part series, the considerations for negotiating and structuring terms are examined. See Article

Seven Factors That Influence Price Negotiations
Using the fair market valuation as a starting point, this article explores seven critical factors that will influence the premium or discount to be applied in reaching a negotiated purchase price package. See Article

M&A Viewpoint:
The Value, Price and Cost of Acquisitions

What is the difference between the value, price and cost of an acquisition and why should you care? See Article

The following 4 articles focus on making the most of an acquired company's customer database assets.

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. 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.

This article provides a review of things you need to know to unlock the value of the target company's database assets.See Article

Evaluating The Target Company's Database Assets
A review of an acquisition candidate's customer database and related technology (hardware, software and network) should be included as part of any due diligence review. Preserving and unlocking the value of the target's database should be a part of every forward-looking acquisition plan.

This article will provide you with a hands-on plan to review and evaluate a target's database assets.See Article

Database Evaluation and Integration Checklist
This checklist has been devised by MoneySoft to help a buyer create a profile of their own system for use as a comparison tool to evaluate the database assets of an acquisition candidate. The checklist is a PDF file that can be adapted to meet your specific need. Feel free to save it to your desktop for future use.
View Checklist (PDF - 215KB)

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. See Article

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