Due Diligence: An M&A Value Creation Approach by William J. Gole, Paul J. Hilger

By William J. Gole, Paul J. Hilger

This nuts-and-bolts consultant examines all elements of an M&A due diligence--from coming to the choice to obtain a firm, to who might be at the due diligence group, to the particular strategy and the ultimate document and post-closing persist with up. It advocates a spotlight on either threat mitigation and shareholder worth construction, and emphasizes a holistic technique that spans from making plans to post-acquisition integration. The tentative contents is: (1) advent; (2) making plans for price production: development process; (3) Engagement and pursuit; (4) getting ready for due diligence; (5) Validation of worth: acting due diligence; (6) review of due diligence effects; (7) Optimizing price: put up diligence negotiation; (8) Extracting price: post-transaction integration.

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A compelling reason to pursue the acquisition, including both a sound strategic rationale and an explicit depiction of the increase in value expected from the transaction Value drivers. An assessment of the magnitude and variability of the sources expected to generate the increased value, framing the key assumptions to be validated in due diligence Key risks. A comprehensive examination of a deal’s inherent downside risks, outlining the most important issues to be mitigated before or after the acquisition Strategic Purpose An organization’s plan to create value should begin with an explicit statement about how a given acquisition would further an organization’s progress toward its strategic goals and objectives.

The acquirer receives in return the combined value, which is the standalone value of the target business plus the synergy value resulting from the integration of the target with the acquirer. 4 Sources of Value Created by Acquisition Investment P1: a/b c01 P2: c/d QC: e/f JWBT093-Gole T1: g June 2, 2009 12:34 Introduction Printer: Courier Westford 19 The deal’s success for the acquirer is measured by the value created, which is the combined value minus the purchase price. A description of each term follows: Stand-alone value.

A comprehensive examination of a deal’s inherent downside risks, outlining the most important issues to be mitigated before or after the acquisition Strategic Purpose An organization’s plan to create value should begin with an explicit statement about how a given acquisition would further an organization’s progress toward its strategic goals and objectives. We discuss this concept at length in Chapter 2. For now, suffice it to say, an acquisition needs to have a clearly communicated strategic rationale.

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