Earnings and Equity build, Acquisitions, Mergers and Sale

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These areas can make or break a company and not many people really understand how they work.

They are all a matter of creating a story that connects with the third party – i.e. marketing exercises. The approach to each aspect is very similar, creating the conditions based on the 7 Pillars that the earnings story can be substantiated.

Debt and equity structuring is an interesting area.  Any investor (whether bankers or private equity) assesses a company in exactly the same way as an acquisition, merger or sale.

Acquisitions can be used to increase the earnings of a company or indeed start the entrepreneur on their business journey.  Acquisitions are the area where someone should proceed with extreme caution.  There are so many moving parts of a potential acquisition that need to be checked before buying a  business (Due Diligence) that our best advice is to use a third party that has undertaken these practically (not in theory  – eg professional firms) because there are non financial pitfalls that may trip you up.

A Merger is another form of Acquisition/Sale where 2 parties are mutually purchasing/selling their interests – EXTREME care is required in this area more than any, because the psychology of an integration can be ‘interesting’ lets say.

Sales of businesses are the ‘flip side’ of purchases.  The seller will tell a story (not an untrue story) that will need to be checked by the buyer.  It is the sellers job to make the story as good as they can and back it up with supporting contracts, systems and numbers – which will be checked by a shrewd buyer.

If you would like to speak further on this area, please call me or email me at phil@philolsen.com