You have a Board Paper to write summarizing the benefits of acquiring your smaller competitor. You want to make an impact with a one page executive summary of why it’s such a good deal. What do you cover? Here some questions you need to answer:
- What is the total cost of the acquisition pre and post earn out?
- What is the logic of the price? – covering:
- Profits adjusted to reflect your ownership
- Multiples used -PE basis, Price to Sales, Price to Net Assets.
- If an earn out deal is proposed, highlight the initial PE and demonstrate that exit PE is lower when the earn-out completes.
- Previous deals done in the industry with prices & multiples paid.
- Highlight specific savings if any you are building them into the logic. Note who is leading the cost savings project and the timetable for achieving them.
- Highlight the ROI covering the total acquisition costs.
- What is the essence of the post acquisition strategy?
- What is the strategic case for the deal?
- Are there any regulatory hurdles still to be overcome?
- What was the most material issue uncovered in due diligence and how is it factored into the deal?
- What are the potential negative impacts of the deal and how are we trying to mitigate them?
- What impact if any will there be on our management structure?
- What’s the likely impact on our market share, our sales by industry, sales by territory?
- Will it have a positive or negative impact on any of our Key Performance Ratios?
The Portfolio Partnership designs and executes acquisition strategies in partnership with clients using our Acquisitions Approval Model™ process.
