CHAPTER 3
Does It Makes Sense?
Financial, Commercial, and Operational Due Diligence
Sellers—unsurprisingly—present buyers with rosy pictures of their future revenues and margins, and for good reason: A significant portion of most companies’ shareholder value is based on future growth expectations. Acquirers must take on the fact the future is filled with uncertainty for both the stability of the current business and profitable revenue growth.
As a consequence, acquirers must perform due diligence on both the current business and its stand-alone future growth potential because they will pay for both—plus a premium. Remember, when acquirers play this game, they pay an up-front premium for some distribution of potential outcomes—the synergies ...
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