Technical - Factors to Consider When Evaluating an Acquisition
- 02:48
Investment Banking Superday interview technical question - Factors to consider when evaluating an acquisition.
Downloads
No associated resources to download.
Transcript
Now our client, the CEO, is keen to acquire another business and they are looking at another UK based bakery to acquire. Yeah. What factors should you consider in your evaluation of this potential acquisition? Ready for discussion with the client. Okay. So, sorry, could you repeat, repeat The question? Yeah, absolutely. What factors should you consider in the evaluation for discussion with the client? Okay, So I'm less concerned about the nuts and bolts of valuation. Yeah. You are going to be taking the role of the senior banker. Yeah. And you are going to be discussing a range of factors with your client about this potential acquisition. Okay. So I'd look at how the potential acquisition could compliment our offering. So would that be perhaps going deeper into a market? Would that be increasing the breadth of our offering? Or would that actually be making us go further in terms of perhaps geographically? I would perhaps look at ways in which we could achieve synergies. Synergies are when two businesses merge and kind of the operational efficiencies that you can achieve. They could be managerial synergies, et cetera, et cetera. I would look at the considerations of that business. So would we have key management staying in the business from the business we're acquiring? Would they be looking to kind of roll over their equity and, and have a stake in in the new business? Excellent. What other consideration considerations could be? Give me a moment to gather my thoughts.
I'd also just look more generally at kind of the stage in which the current owners and shareholders are at. If they're perhaps a retirement age and they're looking for an exit, you could perhaps be a little bit more aggressive in your valuation and think that they'd perhaps take a lower offer. I'd also look at competitors. Who else is in the market for, for this business? Would we have competition from perhaps other, other strategic buyers or from private equity houses? And I think that would really help us kind of get gauge in competitive environment and again, look at how we could perhaps reduce our, our value reduce the offer that we put in for them. Very good. Yeah. Excellent stuff. Mm-Hmm. We can think about funding options too. What are we going to go with? Debt? Mm-Hmm. Equity. I liked how you touched on the existing shareholders and the shareholders of the target. Very, very good.