When meeting an owner for the first time, your goal is not to instantly sign a deal. You first want to get to know them and make them feel comfortable about selling their business to you. In order to do this, there are some important questions to ask and subjects to broach, which I’ve covered …
Category: M&A and External Growth
The Most Important Thing about M&A According to Warren Buffett
Last week, thousands of investors gathered at Berkshire Hathaway’s annual shareholder meeting in Omaha. Warren Buffett, perhaps one of the greatest strategic acquirers, shared his insights for successful acquisitions. There are two pearls of Buffett wisdom, reported direct from the meeting by Dealbook that I’d like to highlight in this post. Looking at the Big …
How You Can Get an Owner to Say “Yes” to Acquisition
When contacting an owner about acquisitions, don’t be surprised to hear “no.” Most owners, when asked about selling their “not-for-sale” business will automatically refuse simply because it’s unexpected. Remember, for an owner focused on running the day-to-day operations of his business, this offer is coming out of the blue. There are, of course, a number of …
Pruning for Growth — the Power of Divestment
News in from Coca-Cola reminds us that growth is more about recalibration than it is about adding size. According to the Wall Street Journal, Coke plans to sell off all of its US manufacturing plants by 2017. Why would they do that? Coke has struggled with its asset heavy distribution over the past couple of …
Snapshots from the 2016 NACUSO Annual Conference
Last week Capstone Managing Director John Dearing had the opportunity to attend the 2016 NACUSO Annual Conference on April 4-7, 2016. Over 400 people attended the Las Vegas event, exchanging ideas and listening to industry experts. Conference topics included investment services, insurance services, innovation and operations, technology, member business lending, mortgage services, and business development. Erik …
Pfizer and Allergan Break Up: Lessons in Staying Ahead of M&A Hazards
Pfizer and Allergan have announced that they are abandoning their $160 billion merger. This resulted from a political storm around tax inversions, a technique whereby US companies relocate abroad to avoid the high US corporate tax rates. The Treasury department took action to insert new rules that effectively killed the financial benefits of the deal. …
How to Break Bad News without Sinking Your Acquisition
Poor communication can really hamper your integration efforts, especially when you have to break bad news to your employees. When it comes to sharing an unpopular message, some executives try to sugar coat or beat around the bush. In my experience, avoidance tactics are not effective and just make employees angrier once they eventually find …
What is a Minority Investment?
Minority investments are a creative way to think about transactions, one that is often overlooked. When we create a transaction with a company, there is a spectrum of possible involvements—everything from an informal strategic alliance to a 100% acquisition. A minority investment is somewhere in between these extremes. Typically consisting of a quarter to a third …
Why Disagreeing With Your M&A Team Is Good
You may be surprised I’m saying this, but vigorous arguments in your acquisition team can be a good thing. In fact, I would be alarmed if there was never any disagreement over a prospective purchase. Either someone is lying or afraid to speak up, unless your entire team is quite exceptionally in sync. Dissent can …
What Is Happening with Valuation Multiples Today?
In 2015, record valuations drove a boom in mergers and acquisitions activity, leaving many to wonder when the deal bubble would burst. In 2015, US buyout firms paid an average of 10.3 times EBITDA compared with the previous record of an average 9.7 times multiple in 2007. Despite hitting a peak, valuations are still expected …
