Buy-Side Considerations

Many observers predict that the market is rife for an unprecedented period of M&A activity, as the aging of the current generation of senior leadership and ownership pushes many middle-market companies to seek an outright sale or some other form of liquidity.

Obviously, not all companies are in this position. For those positioned for continued ownership, an acquisition strategy could be a key component of long-term growth.

For most middle-market companies, especially those that have not been acquisitive in the past, executing on a single acquisition (much less a broader acquisition strategy) can be fraught with risk. There are many elements, from finding the right targets, to pricing the deal correctly, to successfully integrating the acquired business that could derail efforts to build shareholder value through acquisition.

In this series of articles, we cover buy-side topics from the perspective of middle-market companies looking to enter the acquisition market.

Click the links below to read the articles in this series.

1. Identifying Acquisition Targets and Assessing Strategic Fit

Our first topic in this buy-side series starts at the beginning. Whether your motivations to buy are based on synergies, efficiencies, or simply on the inertial forces of consolidation that cycle through many industries, a well-organized and disciplined process is paramount to examining and approaching the market for hopeful growth opportunities.

2. How to Approach a Target and Perform Initial Due Diligence

This is the second article in a series on buy-side considerations from the perspective of middle-market companies looking to enter the acquisition market. Our focus in this article is to summarize some practical considerations for approaching and vetting an identified target.

3. Strategic Premiums: Can 2+2 Equal 5?

Many acquirers buy businesses at a value higher than this intrinsic value, paying what is referred to as a strategic premium. In this article, we discuss the theory behind strategic premiums, and how they can be advantageous or detrimental to acquirers.

4. Considerations in Merger Transactions

When considering a buy-side transaction to expand, many middle-market companies may not consider a merger transaction as an option compared to an outright acquisition. Mergers are often seen as transactions for big conglomerate-type companies on Wall Street, but they can be effective for middle-market businesses as well. In this article, we discuss the key questions that must be addressed when considering a merger transaction, including, corporate governance, social issues and economic questions.

5. The Importance of a Quality of Earnings Study