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Successful Acquisitions by David Braun

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CONVENTIONAL VALUATION

I want to emphasize that valuation should be anchored in your strategic rationale for buying another company in the first place. It all comes back to your business strategy and the synergies that will be created by the union of two companies. Valuation is an exercise in predicting the future, and the underlying question your process addresses should be: What will those synergies be worth in two, five, or even ten years?

Take, for example, a client of mine who was interested in buying a company with federal government contracts with the Department of Homeland Security (DHS). His main strategic rationale for the acquisition was to gain a foothold in Homeland Security contracting. Therefore, a prospect’s value to my client ...

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