Tips

Acquisition financial models always contain potential synergy amounts (and hopefully also dis-synergies, integration costs, required capital expenditure and quantified risks). Most also consider several cases – Best Case, Most Likely Case etc. in which each case considers higher or lower values for the various assumptions made.

[caption id="attachment_132" align="alignleft" width="150"]Valuation tips To Buy or Not to Buy – The Numbers Don’t Lie…?[/caption] In our work helping businesses assess and value potential acquisition targets, we often hear a common and strongly-held belief: ‘The strategic acquisition rationale and related softer issues are important, but ultimately the deal has to make financial sense; our valuation – and the financial model underpinning it - is absolutely critical. After all, 'numbers never lie!’

Once the deal is done someone must take responsibility for executing the merger integration plan.  Beware of simply allocating it to senior managers as part of their day job.  They may not say so directly, but they are employed to manage a business function and this is, by its nature, a full time role.

Too often we see companies try to hold newly acquired businesses in a ‘steady state’ for a period after acquisition and then fail to communicate with the new combined workforce, arguing that it's Business as Usual. This can create 'communications gaps' that result in rumours and activities designed for self-protection, unsettled personnel and talent heading for the door.